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PUBLIC LAW 100-203— DEC. 22, 1987 



OMNIBUS BUDGET RECONCILIATION 
ACT OF 1987 



101 STAT. 1330 PUBLIC LAW 100-203— DEC. 22, 1987 



^Public Law 100-203 
100th Congress 



An Act 



Dec. 22, 1987 To provide for reconciliation pursuant to section 4 of the concurrent resolution on the 
[H.R. 3545] budget for the fiscal year 1988. 

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 



Omnibus Budget 
Reconciliation 
Act of 1987. 



SECTION 1. SHORT TITLE. 

This Act may be cited as the 
of 1987". 

SEC. 2. TABLE OF CONTENTS. 



'Omnibus Budget Reconciliation Act 



Title I— Agriculture and related programs. 
Title II — National Economic Commission. 
Title III — Education progp-ams. 

Title IV — Medicare, medicaid, and other health-related programs. 

Title V — Energy and environmental programs. 

Title VI — Civil service and postal service programs. 

Title VII — Veterans' programs. 

Title VIII — Budget policy and fiscal procedures. 

Title IX — Income security and related programs. 

Title X — Revenues. 



Agricultural 
Reconciliation 
Act of 1987. 



TITLE I— AGRICULTURE AND RELATED 
PROGRAMS 



7 use 1421 note. 



SEC. 1001. SHORT TITLE; TABLE OF CONTENTS. 

(a) Short Title. — This title may be cited as the 
Reconciliation Act of 1987". 

(b) Table of Contents.— The table of contents is 

TABLE OF CONTENTS 

Sec. 1001. Short title; table of contents. 

Subtitle A — Adjustments to Agricultural Commodity Programs 

Sec. 1101. Target price reductions. 

Sec. 1102. Loan rates. 

Sec. 1103. Feed grain diversion program. 

Sec. 1104. Price support reduction for nontarget price commodities. 

Sec. 1105. Loan rate differentials. 

Sec. 1106. Storage cost adjustment. 

Sec. 1107. Acreage limitation program for oats. 

Sec. 1108. Producer reserve program. 

Sec. 1109. Yield adjustments. 

Sec. 1110. Advance payments. 

Sec. 1111. Advanced emergency compensation payments for wheat. 
Sec. 1112. Tobacco provisions. 
Sec. 1113. Haying and grazing. 



Agricultural 
as follows: 



ENROLLMENT ERRATA 

Pursuant to the provisions of section 8004 of this Act (appearing on 101 Stat. 
1330-282), changes made are indicated by footnote. 



•Note: For information on the printing of this law and a related Presidential memorandum, see the editorial note 
at the end. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-1 

Subtitle B — Optional Acreage Diversion 

Sec. 1201. Wheat optional acreage diversion program. 
Sec. 1202. Feed grains optional acreage diversion program. 
Sec. 1203. Regulations. 

Subtitle C — Farm Program Payments 

Sec. 1301. Prevention of the creation of entities to qualify as separate persons. 

Sec. 1302. Payments limited to active farmers. 

Sec. 1303. Definition of person: eligible individuals and entities; restrictions applic- 
able to cash-rent tenants. 

Sec. 1304. More effective and uniform application of payment limitations. 

Sec. 1305. Regulations; transition rules; equitable adjustments. 

Sec. 1306. Foreign persons made ineligible for program benefits. 

Sec. 1307. Honey loan limitation. 

Subtitle D — Prepayment of Rural Electrification Loans ^ _ 

Chapter 1 — Prepayment of Rural Electrification Loans 

Sec. 1401. Prepayment of loans. 
Sec. 1402. Use of funds. 

Sec. 1403. Cushion of credit payments program. 

Chapter 2 — Rural Telephone Bank Borrowers 

Sec. 1411. Rural Telephone Bank interest rates and loan prepayments. 
Sec. 1412. Interest rate to be considered for purposes of assessing eligibility for 
loans. 

Sec. 1413. Establishment of reserve for losses due to interest rate fluctuations. 
Sec. 1414. Publication of Rural Telephone Bank policies and regulations. 

Subtitle E — Miscellaneous 
Sec. 1501. Marketing order penalties. 

Sec. 1502. Study of use of agricultural commodity futures and options markets. 
Sec. 1503. Authorization of appropriations for Philippine food aid initiative. 
Sec. 1504. Rural industrialization assistance. 
Sec. 1505. Plant variety protection fees. 

Sec. 1506. Annual appropriations to reimburse the Commodity Credit Corporation 

for net realized losses. 
Sec. 1507. Federal crop insurance. 
Sec. 1508. Ethanol usage. 

Sec. 1509. Demonstration of family independence program. 



Subtitle A — Adjustments to Agricultural 
Commodity Programs 



SEC. 1101. TARGET PRICE REDUCTIONS. 

(a) Wheat.— Effective only for the 1988 and 1989 crops of wheat, 
section 107D(c)(l)(G) of the Agricultural Act of 1949 (7 U.S.C. 1445b- 
3(c)(1)(G)) is amended by striking out "$4.29 per bushel for the 1988 
crop, $4.16 per bushel for the 1989 crop" and inserting in lieu 
thereof "$4.23 per bushel for the 1988 crop, $4.10 per bushel for the 
1989 crop". 

(b) Feed Grains.— Effective only for the 1988 and 1989 crops of 
feed grains, section 105C(c)(l)(E) of such Act (7 U.S.C. 1444e(c)(l)(E)) 
is amended by striking out "$2.97 per bushel for the 1988 crop, $2.88 
per bushel for the 1989 crop" and inserting in lieu thereof "$2.93 per 
bushel for the 1988 crop, $2.84 per bushel for the 1989 crop". 

(c) Cotton.— Effective only for the 1988 and 1989 crops of upland 
cotton, section 103A(c)(l)(D) of such Act (7 U.S.C. 1444-l(c)(l)(D)) is 
amended by striking out "$0.77 per pound for the 1988 crop, $0,745 
I CMS Library 

' Copy read "loans". \ C2-07-13 

j 7500 S=scunty Blvd. 
[BaiUmorS; Msry^i^ncl 21244 



101 STAT. 1330-2 PUBLIC LAW 100-203— DEC. 22, 1987 



per pound for the 1989 crop" and inserting in lieu thereof "$0,759 
per pound for the 1988 crop, $0,734 per pound for the 1989 crop". 

(d) Extra Long Staple Cotton.— Effective only for the 1988 and 
1989 crops of extra long staple cotton, section 103(h)(3)(B) of such Act 
(7 U.S.C. 1444(h)(3)(B)) is amended— 

(1) by striking out 'The" and inserting in lieu thereof "Except 
as provided in clause (ii), the"; and 

(2) by adding at the end thereof the following new clause: 
"(ii) In the case of each of the 1988 and 1989 crops of extra long 

staple cotton, the established price for each such crop shall be 118.3 
percent of the loan level determined for such crop under paragraph 
(2).". 

(e) Rice.— Effective only for the 1988 and 1989 crops of rice, 
section 101A(c)(l)(D) of such Act (7 U.S.C. 1441-l(c)(l)(D)) is amended 
by striking out "$11.30 per hundredweight for the 1988 crop, $10.95 
per hundredweight for the 1989 crop" and inserting in lieu thereof 
"$11.15 per hundredweight for the 1988 crop, $10.80 per hundred- 
weight for the 1989 crop". 

SEC. 1102. LOAN RATES. 

(a) Wheat.— Effective only for the 1988 through 1990 crops of 
wheat, section 107D(a)(3)(B) of the Agricultural Act of 1949 (7 U.S.C. 
1445b-3(a)(3)(B)) is amended by striking out "not be reduced by more 
than 5 percent from the level determined for the preceding crop." 
and inserting in lieu thereof the following: "not be reduced by more 
than — 

"(i) in the case of the 1987 crop, 5 percent from the level 
determined for the preceding crop; 

"(ii) in the case of the 1988 crop, 3 percent from the level 
determined for the preceding crop; 

"(iii) in the case of the 1989 crop, 5 percent from the level 
determined for the preceding crop, plus an additional 2 
percent from the level determined for the preceding crop if 
the Secretary, after taking into account any reduction that 
is provided for under paragraph (4)(A)(ii), determines that 
such additional percentage reduction is necessary to main- 
tain a competitive market position for wheat; and 

"(iv) in the case of the 1990 crop, 5 percent from the level 
determined for the preceding crop.". 

(b) Feed Grains.— Effective only for the 1988 through 1990 crops 
of feed grains, section 105C(a)(2)(B) of such Act (7 U.S.C. 
1444e(a)(2)(B)) is amended by striking out "not be reduced by more 
than 5 percent from the level determined for the preceding crop." 
and inserting in lieu thereof the following: "not be reduced by more 
than — 

"(i) in the case of the 1987 crop, 5 percent from the level 
determined for the preceding crop; 

"(ii) in the case of the 1988 crop, 3 percent from the level 
determined for the preceding crop; 

"(iii) in the case of the 1989 crop, 5 percent from the level 
determined for the preceding crop, plus an additional 2 
percent from the level determined for the preceding crop if 
the Secretary, after taking into account any reduction that 
is provided for under paragraph (3)(A)(ii), determines that 
such additionsd percentage reduction is necessary to main- 
tain a competitive market position for feed grains; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-3 



"(iv) in the case of the 1990 crop, 5 percent from the level 
determined for the preceding crop.". 

(c) Cotton. — Effective only for the 1988 through 1990 crops of 
upland cotton, subparagraph (A) of section 103A(a)(2) of such Act (7 
U.S.C. 1444-l(a)(2)(A)) is amended to read as follows: 

"(A) The loan level for any crop determined under paragraph 
(1)(B) may not be reduced below 50 cents per pound nor more than — 

"(i) in the case of the 1987 crop, 5 percent from the level 
determined for the preceding crop; 

"(ii) in the case of the 1988 crop, 3 percent from the level 
determined for the preceding crop; 

"(iii) in the case of the 1989 crop, 5 percent from the level 
determined for the preceding crop, plus an additional 2 percent 
from the level determined for the preceding crop if the Sec- 
retary determines that such additional percentage reduction is 
necessary to maintain a competitive market position for upland 
cotton; and 

"(iv) in the case of the 1990 crop, 5 percent from the level 
determined for the preceding crop.". 

(d) Rice.— Effective only for the 1988 through 1990 crops of rice, 
paragraph (2) of section lOlA(a) of such Act (7 U.S.C. 1441-l(a)(2)) is 
amended to read as follows: 

"(2) The loan level for any crop determined under paragraph (1)(B) 
may not be reduced by more than — 

"(A) in the case of the 1987 crop, 5 percent from the level 
determined for the preceding crop; 

"(B) in the case of the 1988 crop, 3 percent from the level 
determined for the preceding crop; 

"(C) in the case of the 1989 crop, 5 percent from the level 
determined for the preceding crop, plus an additional 2 percent 
from the level determined for the preceding crop if the Sec- 
retary determines that such additional percentage reduction is 
necessary to maintain a competitive market position for rice; 
and 

"(D) in the case of the 1990 crop, 5 percent from the level 
determined for the preceding crop.". 

SEC. 1103. FEED GRAIN DIVERSION PROGRAM. 

Effective only for the 1988 and 1989 crops of feed grains, section 
105C(f)(5) of the Agricultural Act of 1949 (7 U.S.C. 1444e(f)(5)) is 
amended by adding at the end thereof the following new 
subparagraph: 

"(D)(i) In the case of the 1988 and 1989 crops of corn, grain 
sorghums, and barley, except as provided in clause (ii), the Secretary 
shall make land diversion payments to producers of corn, grain 
sorghums, and barley, in accordance with this paragraph, under 
which the required reduction in the crop acreage base shall be 10 
percent and the diversion payment rate shall be $1.75 per bushel for 
corn. The Secretary shall establish the diversion payment rate for 
grain sorghums and barley at such level as the Secretary determines 
is fair and reasonable in relation to the rate established for corn. 

"(ii) In the case of the 1989 crop of corn, grain sorghums, or 
barley, the Secretary may waive the application of clause (i) if the 
Secretary determines that it is necessary to maintain an adequate 
supply of corn, grain sorghums, or barley.". 



101 STAT. 1330-4 PUBLIC LAW 100-203— DEC. 22, 1987 

SEC. 1104. PRICE SUPPORT REDUCTION FOR NONTARGET PRICE 
COMMODITIES. 

(a) Tobacco.— Effective only for the 1988 and 1989 crops of to- 
bacco, section 106(f) of the Agricultural Act of 1949 (7 U.S.C. 1445(f)) 
is amended by adding at the end thereof the following new 
paragraph: 

"(8)(A) Notwithstanding any other provision of this subsec- 
tion, in the case of each of the 1988 and 1989 crops of any kind 
of tobacco, the Secretary shall reduce the support level for such 
crop by an amount equal to 1.4 percent of the level otherwise 
established under this subsection. Any such reduction shall not 
be taken into consideration in determining the support level for 
a subsequent crop of tobacco. 

"(B) In lieu of making any such reduction, the Secretary may 
impose assessments on the producers and purchasers in an 
amount sufficient to realize a reduction in outlays equal to the 
amount that would have been achieved as a result of the 
Contracts. reduction required under subparagraph (A). Such assessments 

shall not apply to purchasers if it is judicially determined that 
the imposition of the purchaser assessment will adversely affect 
the contracts entered into under section 1109 of the Consoli- 
dated Omnibus Budget Reconciliation Act of 1986 (7 U.S.C. 
1445-3).". 

05) Peanuts.— Effective only for the 1988 and 1989 crops of pea- 
nuts, section 108B of such Act (7 U.S.C. 1445c-2) is amended by 
adding at the end thereof the following new paragraph: 

"(6) Notwithstanding any other provision of this section, in 
the case of each of the 1988 and 1989 crops of peanuts, the 
Secretary shall reduce outlays under the program provided for 
under this subsection by an amount equal to 1.4 percent of the 
amount of outlays that would otherwise be incurred in the 
absence of the reduction required by this paragraph.". 

(c) Honey. — Effective only for the 1987 through 1990 crops of 
honey, section 201(b)(1) of such Act (7 U.S.C. 1446(b)(1)) is amended 
by adding at the end thereof the following new subparagraph: 

"(D) Notwithstanding the foregoing provisions of this para- 
graph, effective for each of the 1987 through 1990 crops, the 
loan and purchase level for honey that would otherwise apply 
under subparagraphs (B) and (C), without regard to this 
subparagraph, shall be reduced for loans and purchases made 
after the date of the enactment of this subparagraph by 2 cents 
per pound for the 1987 crop, % cents per pound for the 1988 
crop, y2 cent per pound for the 1989 crop, and cent per pound 
for the 1990 crop.". 

(d) Milk.— Section 201(d)(2) of such Act (7 U.S.C. 1446(d)) is 
amended — 

(1) in subparagraph (C), by striking out "subparagraph (A)" 
and inserting in lieu thereof "this paragraph"; and 

(2) by adding at the end thereof the following new 
subparagraph: 

"(F) During calendar year 1988, the Secretary shall provide for a 
reduction of 2V2 cents per hundredweight to be made in the price 
received by producers for all milk produced in the United States and 
marketed by producers for commercial use.". 

(e) Sugar.— Section 201(j) of such Act (7 U.S.C. 1446(j)) is amended 
by adding at the end thereof the following new paragraph: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-5 



"(7) Notwithstanding any other provision of this section, in 
the case of each of the 1988 and 1989 crops of sugar beets and 
sugarcane, the Secretary shall reduce outlays under the pro- 
gram provided for under this subsection by an amount equal to 
1.4 percent of the amount of outlays that would otherwise be 
incurred in the absence of the reduction required by this 
paragraph.". 

(f) Wool and Mohair. — Section 703(b) of the National Wool Act of 
1954 (7 U.S.C. 1782) is amended— 

(1) by striking out "The" and inserting in lieu thereof "(1) 
Except as provided in paragraphs (2) and (3), the"; 

(2) by striking out Provided,'' and all that follows through 
the period and inserting in lieu thereof a period; and 

(3) by adding at the end thereof the following new paragraphs: 
"(2) Except as provided in paragraph (3), for the marketing years 

beginning January 1, 1982, and ending December 31, 1990, the 
support price for shorn wool shall be 77.5 percent (rounded to the 
nearest full cent) of the amount calculated according to para- 
graph (1). 

"(3) For the marketing years beginning January 1, 1988, and 
ending December 31, 1989, the support price for shorn wool shall be 
76.4 percent (rounded to the nearest full cent) of the amount cal- 
culated according to paragraph (1).". 

SEC. 1105. LOAN RATE DIFFERENTIALS. 

Section 403 of the Agricultural Act of 1949 (7 U.S.C. 1423) is 
amended by adding at the end thereof the following new sentence: 
"Notwithstanding the preceding provisions of this section, for each 
of the 1988 through 1990 crops of wheat and feed grains, no adjust- 
ment in the loan rate applicable to a particular region. State, or 
county for the purpose of reflecting transportation differentials may 
increase or decrease such regional. State, or county loan rate from 
the level established for the previous year by more than the percent- 
age change in the national average loan rate plus or minus 2 
percent.". 

SEC. 1106. STORAGE COST ADJUSTMENT. 15 USC 714b 

For the fiscal years 1988 and 1989, the Secretary of Agriculture 
shall ensure that expenditures of the Commodity Credit Corporation 
for commercial storage, transportation, and handling of commod- 
ities owned by the Corporation (excluding storage payments made in 
accordance with section 110 of the Agricultural Act of 1949 (7 U.S.C. 
1445e)) are reduced by $230,000,000 in such fiscal years from the 
amount of funds otherwise projected to be expended in fiscal years 
1988 and 1989 under the budget base determined under section 251 
of the Balanced Budget and Emergency Deficit Control Act of 1985 
(2 U.S.C. 901) for commercial storage, transportation, and handling 
of such commodities. In order to achieve the savings required by this 
section, the Secretary shall adjust storage, handling, or transpor- 
tation expenditures paid by the Corporation or take other appro- 
priate actions. 

SEC. 1107. ACREAGE LIMITATION PROGRAM FOR OATS. 

Effective only for the 1988 through 1990 crops of feed grains, 
section 105C(D(2) of the Agricultural Act of 1949 (7 U.S.C. 1444e(f)(2)) 
is amended by adding at the end thereof the following new subpara- 
graph: 



101 STAT. 1330-6 PUBLIC LAW 100-203— DEC. 22, 1987 



*'(G) In the case of the 1988 through 1990 crops of oats, the 
Secretary shall not establish a percentage reduction in accordance 
Regulations. with paragraph (1) in excess of 5 percent. In implementing this 
subparagraph, the Secretary shall issue regulations that provide for 
the fair and equitable treatment of producers on a farm for which 
an oat and barley crop acreage base has been established. To ensure 
the efficient and fair implementation of this subparagraph, the 
Secretary shall announce revisions of the acreage limitation pro- 
gram for the 1988 crop of feed grains that implement this subpara- 
graph as soon as practicable after the date of enactment of the 
Agricultural Reconciliation Act of 1987. In the case of the 1990 crop 
of oats, the Secretary may waive the application of this subpara- 
graph if the Secretary determines that the supply of oats will be 
excessive.". 

SEC. 1108. PRODUCER RESERVE PROGRAM. 

Subparagraph (A) of the fourth sentence of section 110(b) of the 
Agricultural Act of 1949 (7 U.S.C. 1445e(b)) is amended— 

(1) in clause (i), by striking out "17 percent of the estimated 
total domestic and export usage of wheat during the then 
current marketing year for wheat, as determined by the Sec- 
retary" and inserting in lieu thereof "300 million bushels"; and 

(2) in clause (ii), by striking out "7 percent of the estimated 
total domestic and export usage of feed grains during the then 
current marketing year for feed grains, as determined by the 
Secretary" and inserting in lieu thereof "450 million bushels". 

SEC. 1109. YIELD ADJUSTMENTS. 

Effective only for the 1988 through 1990 crops of wheat, feed 
grains, upland cotton, and rice, section 50603)(2) of the Agricultural 
Act of 1949 (7 U.S.C. 1466(b)(2)) is amended by adding at the end 
thereof the following new subparagraph: 

"(C) In the case of each of the 1988 through 1990 crop years for a 
commodity, if the farm program payment yield for a farm is reduced 
more than 10 percent below the farm program payment yield for the 
1985 crop year, the Secretary shall make available to producers 
established price payments for the commodity in such amount as the 
Secretary determines is necessary to provide the same total return 
to producers as if the farm program payment yield had not been 
reduced more than 10 percent below the farm program payment 
yield for the 1985 crop year. Such payments shall be made available 
to producers at the time final deficiency payments are made 
available.". 

SEC. 1110. ADVANCE PAYMENTS. 

Effective only for the 1988 through 1990 crops of wheat, feed 
grains, upland cotton, and rice, section 107C(a) of the Agricultural 
Act of 1949 (7 U.S.C. 1445b-2(a)) is amended— 

(1) by striking out paragraph (1) and inserting in lieu thereof 
the following new paragraph: 

"(1) If the Secretary establishes an acreage limitation or set-aside 
program for any of the 1988 through 1990 crops of wheat, feed 
grains, upland cotton, or rice under this Act and determines that 
deficiency pajmients will likely be made for such commodity for 
such crop, the Secretary shall make advance deficiency payments 
available to producers for each of such crops."; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-7 



(2) in paragraph (2)(F), by striking out clause (iii) and insert- 
ing in lieu thereof the following new clause: 

"(iiiXD in the case of wheat and feed grains, not less than 
40 percent, nor more than 50 percent, of the projected 
payment rate; and 

"(II) in the case of rice and upland cotton, not less than 30 
percent, nor more than 50 percent, of the projected pay- 
ment rate,". 

SEC. 1111. ADVANCED EMERGENCY COMPENSATION PAYMENTS FOR 
WHEAT. 

Effective only for the 1987 through 1990 crops of wheat, section 
107D(c)(l)(E) of the Agricultural Act of 1949 (7 U.S.C. 1445b- 
3(c)(lXE)) is amended by adding at the end thereof the following new 
clauses: 

"(iii) Notwithstanding any other provision of this Act, in the case 
of each of the 1987 through 1990 crops of wheat, the Secretary 
shall— 

"(I) by December 1 of each of the marketing years for such 
crops (or, in the case of the 1987 crop, as soon as practicable 
after the date of enactment of the Agricultural Reconciliation 
Act of 1987), estimate the national weighted average market 
price, per bushel of wheat, received by producers during such 
marketing year; 

"(II) by December 15 of such marketing year (or, in the case of 
the 1 987 crop, as soon as practicable, but not later than 75 days, 
after the date of enactment of such Act), use the estimate to 
make available to producers who have elected the payment 
option authorized by this clause not less than 75 percent of the 
increase in established price payments estimated to be payable 
with respect to such crop under this subparagraph; and 

"(III) adjust the amount of each final established price pay- 
ment for wheat to reflect any difference between the amount of 
any estimated payment made under this clause and the amount 
of actual payment due under this subparagraph, 
"(iv) Producers shall elect the payment option authorized by 
clause (iii) — 

"(I) in the case of the 1987 crop of wheat, not later than 45 
days after the date of the enactment of this clause; and 

"(II) in the case of each of the 1988 through 1990 crops of Contracts, 
wheat, at the time of entering into a contract to participate in 
the program established by this section for the crop.". 

SEC. 1112. TOBACCO PROVISIONS. 

(a) Transfer Authority.— Section 316 of the Agricultural Adjust- 
ment Act of 1938 (7 U.S.C. 316(h)) is amended by adding at the end 7 USC I3i4b. 
thereof the following new subsection: 

"(hXD Notwithstanding any other provision of this section, the 
Secretary may permit, after June 30 of any crop year, the lease and 
transfer of flue-cured tobacco quota assigned to a farm if— 

"(A) the planted acreage of flue-cured tobacco on the farm to 
which the quota is assigned is determined by the Secretary to be 
equal to or greater than 90 percent of the farm's acreage 
allotment, or the planted acreage is determined to be sufficient 
to produce the farm marketing quota under average conditions; 
and 



101 STAT. 1330-8 PUBLIC LAW 100-203— DEC. 22, 1987 



"(B) the farm's expected production of flue-cured tobacco is 
less than 80 percent of the farm's effective marketing quota as a ^ 
result of a natural disaster condition. 
"(2) Any lease and transfer of quota under this paragraph may be 
made to any other farm within the same State in accordance with 
regulations issued by the Secretary.". 

(b) Periodic Adjustment of Yield Factor for ^ Flue-Cured 
Tobacco Acreage-Poundage Quotas. — Section 317(a) of such 
Act (7 U.S.C. 1314c(a)) is amended by striking out "and at five year 
intervals thereafter" each place it appears in paragraphs (2), (4), and 
(6)(A). 

(c) Improved Tobacco Field Measurement.— It is the sense of 
Congress that the Secretary of Agriculture should review current 
compliance procedures for acreage or poundage quotas with respect 
to cigar and dark-air and fire-cured tobaccos under the Agricultural 
Act of 1949 (7 U.S.C. 1421 et seq.) to determine means of improving 
such procedures. The Secretary shall recommend to Congress 
changes in existing law that would be necessary to implement any 
such improvements. 

SEC. 1113. HAYING AND GRAZING. 

(a) Wheat. — Effective only for the 1988 through 1990 crops of 
wheat, section 107D of the Agricultural Act of 1949 (7 U.S.C. 
1445b-3) is amended — 

(1) in subsection (c)(l)(K) — 

(A) in clause (i) — 

(i) by striking out "(i)"; and 

(ii) by redesignating subclauses (I) and (II) as clauses 
(i) and (ii), respectively; and 

(B) by striking out clause (ii); 

(2) in subsection (f)(4) — 

(A) in subparagraph (B) — 

(i) by striking out "Subject to subparagraph (C), the" 
and inserting in lieu thereof "The"; and 

(ii) by striking out "hay and grazing,"; and 

(B) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraph: 

"(C)(i) Except as provided in clauses (ii) and (iii), haying and 
grazing of acreage designated as conservation use acreage for the 
purpose of meeting any requirements established under an acreage 
limitation program (including a program conducted under subsec- 
tion (c)(1)(C)), set-aside program, or land diversion program estab- 
lished under this section shall be permitted, except during any 
consecutive 5-month period that is established by the State commit- 
tee established under section 8(b) of the Soil Conservation and 
Domestic Allotment Act (16 U.S.C. 590h(b)) for a State. Such 5- 
month period shall be established during the period beginning April 
1, and ending October 31, of a year. 

"(ii) In the case of a natural disaster, the Secretary may permit 
unlimited haying and grazing on such acreage. 

"(iii) Haying and grazing shall not be permitted for any crop 
under clause (i) if the Secretary determines that haying and grazing 
would have an adverse economic effect.". 



2 Copy read "For" 



PUBLIC LAW 100-203— DEC. 22, 198 / 101 STAT. 1330-9 

(b) Feed Grains.— Effective only for the 1988 through 1990 crops 

of feed grains, section 105C of such Act (7 U.S.C. 1445b-3) is 7 USC I444e. 
amended — 

(1) in subsection (c)(l)(I) — 

(A) in clause (i) — 

(i) by striking out "(i)"; and 

(ii) by redesignating subclauses (I) and (II) as clauses 
(i) and (ii), respectively; and 

(B) by striking out clause (ii); 

(2) in subsection (f)(4)— 

(A) in subparagraph (B) — 

(i) by striking out "Subject to subparagraph (C), the" 
and inserting in lieu thereof "The"; and 

(ii) by striking out "hay and grazing,"; and 

(B) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraph: 

"(C)(i) Except as provided in clauses (ii) and (iii), haying and 
grazing of acreage designated as conservation use acreage for the 
purpose of meeting any requirements established under an acreage 
limitation program (including a program conducted under subsec- 
tion (c)(1)(B)), set-aside program, or land diversion program estab- 
lished under this section shall be permitted, except during any 
consecutive 5-month period that is established by the State commit- 
tee established under section 8(b) of the Soil Conservation and 
Domestic Allotment Act (16 U.S.C. 590h(b)) for a State. Such 5- 
month period shall be established during the period beginning April 
1, and ending October 31, of a year. 

"(ii) In the case of a natural disaster, the Secretary may permit 
unlimited haying and grazing on such acreage. 

"(iii) Haying and gr sizing shall not be permitted for any crop 
under clause (i) if the Secretary determines that haying and grazing 
would have an adverse economic effect.". 

(c) Cotton.— Effective only for the 1988 through 1990 crops of 
upland cotton, section 103A of such Act (7 U.S.C. 1444-1) is 
amended — 

(1) in subsection (cXl)(G) — 

(A) in clause (i) — 

(i) by striking out "(i)"; and 

(ii) by redesignating subclauses (I) and (II) as clauses 
(i) and (ii), respectively; and 

(B) by striking out clause (ii); 

(2) in subsection (fX3)— 

(A) in subparagraph (B) — 

(i) by striking out "Subject to subparagraph (C), the" 
and inserting in lieu thereof "The"; and 

(ii) by striking out "hay and grazing,"; and 

(B) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraph: 

"(CXi) Except as provided in clauses (ii) and (iii), haying and 
grazing of acreage designated as conservation use acreage for the 
purpose of meeting any requirements established under an acreage 
limitation program (including a program conducted under 
subsection (cXlXC)), set-aside program, or land diversion program 
established under this section shall be permitted, except during any 
consecutive 5-month period that is established by the State commit- 
tee established under section S(b) of the Soil Conservation and 
Domestic Allotment Act (16 U.S.C. 590h(b)) for a State. Such 5- 



101 STAT. 1330-10 PUBLIC LAW 100-203— DEC. 22, 1987 



month period shall be established during the period beginning 
April 1, and ending October 31, of a year. 

"(ii) In the case of a natural disaster, the Secretary may permit 
unlimited haying and grazing on such acreage. 

"(iii) Haying and grazing shall not be permitted for any crop 
under clause (i) if the Secretary determines that haying and grazing 
would have an adverse economic effect.". 

(d) Rice.— Effective only for the 1988 through 1990 crops of rice, 
section 101 A of such Act (7 U.S.C. 1441-1) is amended— 

(1) in subsection (c)(1)(G)— 

(A) in clause (i) — 

(i) by striking out "(i)"; and 

(ii) by redesignating subclauses (I) and (II) as clauses 
(i) and (ii), respectively; and 

(B) by striking out clause (ii); 

(2) in subsection (f)(3)— 

(A) in subparagraph (B) — 

(i) by striking out "Subject to subparagraph (C), the" 
and inserting in lieu thereof "The"'; and 

(ii) by striking out "hay and grazing,"; and 

(B) by striking out subparagraph (C) and inserting in lieu 
thereof the following new subparagraph: 

"(C)(i) Except as provided in clauses (ii) and (iii), haying and 
grazing of acreage designated as conservation use acreage for the 
purpose of meeting any requirements established under an acreage 
limitation program (including a program conducted under subsec- 
tion (c)(1)(B)), set-aside program, or land diversion program estab- 
lished under this section shall be permitted, except during any 
consecutive 5-month period that is established by the State commit- 
tee established under section 80^) of the Soil Conservation and 
Domestic Allotment Act (16 U.S.C. 590h(b)) for a State. Such 5- 
month period shall be established during the period beginning 
April 1, and ending October 31, of a year. 

"(ii) In the case of a natural disaster, the Secretary may permit 
unlimited haying and grazing on such acreage. 

"(iii) Haying and grazing shall not be permitted for any crop 
under clause (i) if the Secretary determines that haying and grazing 
would have an adverse economic effect.". 

Subtitle B — Optional Acreage Diversion 

SEC. 1201. WHEAT OPTIONAL ACREAGE DIVERSION PROGRAM. 

Effective only for the 1988 through 1990 crops of wheat, 
section 107D(c)(l)(C) of the Agricultural Act of 1949 (7 U.S.C. 
1445b-3(c)(l)(C)) is amended— 

(1) in clause (i)(II), by striking out subject to the compliance 
of the producers with clause (ii)"; 

(2) by striking out clauses (ii) and (iii) and inserting in lieu 
thereof the following new clauses: 

"(ii) Notwithstanding any other provision of this section, any 
producer who elects to devote all or a portion of the permitted wheat 
acreage of the farm to conservation uses (or other uses as provided 
in subparagraph (K)) under this subparagraph shall receive defi- 
ciency payments on the acreage that is considered to be planted to 
wheat and eligible for payments under this subparagraph for such 
crop at a per-bushel rate established by the Secretary, except that 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-11 



such rate may not be established at less than the projected defi- 
ciency payment rate for the crop, as determined by the Secretary. 
Such projected payment rate for the crop shall be announced by the 
Secretary prior to the period during which wheat producers may 
agree to participate in the program for such crop. 

"(iii) The Secretary shall implement this subparagraph in such a 
manner as to minimize the adverse effect on agribusiness and other 
agriculturally related economic interests within any county. State, 
or region. In carrying out this subparagraph, the Secretary is au- 
thorized to restrict the total amount of wheat acreage that may be 
taken out of production under this subparagraph, taking into consid- 
eration the total amount of wheat acreage that has or will be 
removed from production under other price support, production 
adjustment, or conservation program activities. No restrictions on 
the amount of acreage that may be taken out of production in 
accordance with this subparagraph in a crop year shall be imposed 
in the case of a county in which producers were eligible to receive 
disaster emergency loans under section 321 of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1961) as a result of a 
disaster that occurred during such crop year."; and 
(3) in clause (iv) — 

(A) by inserting "(or all)" after "such portion"; and 

(B) by inserting "under this subparagraph" after 
"subparagraph (K))". 

SEC. 1202. FEED GRAINS OPTIONAL ACREAGE DIVERSION PROGRAM. 

Effective only for the 1988 through 1990 crops of feed grains, 
section 105C(cXlXB) of the Agricultural Act of 1949 (7 U.S.C. 
1444e(cXlXB)) is amended— 

(1) in clause (iXII), by striking out ", subject to the compliance 
of the producers with clause (ii)"; 

(2) by striking out clauses (ii) and (iii) and inserting in lieu 
thereof the following new clauses: 

"(ii) Notwithstanding any other provision of this section, any 
producer who elects to devote all or a portion of the permitted feed 
grain acreage of the farm to conservation uses (or other uses as 
provided in subparagraph (I)) under this subparagraph shall receive 
deficiency payments on the acreage that is considered to be planted 
to feed greiins and eligible for payments under this subparagraph for 
such crop at a per-bushel rate established by the Secretary, except 
that such rate may not be established at less than the projected 
deficiency payment rate for the crop, as determined by the Sec- 
retary. Such projected payment rate for the crop shall be announced 
by the Secretary prior to the period during which feed grain pro- 
ducers may agree to participate in the program for such crop. 

"(iii) The Secretary shall implement this subparagraph in such a 
manner as to minimize the adverse effect on agribusiness and other 
agriculturally related economic interests within any county. State, 
or region. In carrying out this subparagraph, the Secretary is au- 
thorized to restrict the total amount of feed grain acreage that may 
be taken out of production under this subparagraph, taking into 
consideration the total amount of feed grain acreage that has or will 
be removed from production under other price support, production 
adjustment, or conservation program activities. No restrictions on 
the amount of acreage that may be taken out of production in 
accordance with this subparagraph in a crop year shall be imposed 
in the case of a county in which producers were eligible to receive 



101 STAT. 1330-12 PUBLIC LAW 100-203— DEC. 22, 1987 



disaster emergency loans under section 321 of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1961) as a result of a 
disaster that occurred during such crop year."; and 
(3) in clause (iv) — 

(A) by inserting "(or all)" after "such portion"; and 

(B) by inserting "under this subparagraph" after 
"subparagraph (I))". 

SEC. 1203. REGULATIONS. 

(a) In General. — Not later than 30 days after the date of enact- 
ment of this Act, the Secretary of Agriculture shall issue regulations 
implementing the amendments made to sections 107D(c)(l)(C) and 
105C(c)(l)(B) of the Agricultural Act of 1949 (7 U.S.C. 1445b-3(c)(l)(C) 
and 1444e(c)(l)(B)) by sections 1201 and 1202, respectively. 

(b) NoNREDUCTiON OF Bases AND YiELDS. — Such regulations shall 
include provisions that ensure that the wheat or feed grain crop 
acreage base and farm program payment yield for any farm will not 
be reduced if the producers on the farm set aside from production 
all, or a portion, of the producer's permitted acreage under the 
acreage diversion program under section 107D(c)(l)(C) or 
105C(c)(l)(B) as amended by section 1201 or 1202, respectively. 

(c) Effect on Landlord-Tenant Relations.— Such regulations 
shall ensure, to the maximum extent practicable, that the programs 
authorized under this subtitle will not adversely affect the relation- 
ships between landlords and tenants, regarding any crop acreage 
base entered into such programs, in existence on the date of enact- 
ment of this Act. 

Subtitle C — Farm Program Payments 

SEC. 130L PREVENTION OF THE CREATION OF ENTITIES TO QUALIFY AS 
SEPARATE PERSONS. 

(a) In General. — Effective beginning with the 1989 crops, the 
Food Security Act of 1985 is amended — 

(1) in section 1001(1) (7 U.S.C. 1308), by striking out "For 
each" and inserting in lieu thereof ''Subject to sections lOOlA 
through lOOlC, for each"; 

(2) in section 1001(2)— 

(A) in subparagraph (A), by striking out "For each" and 
inserting in lieu thereof "Subject to sections 1001 A through 
lOOlC, for each"; and 

(B) in subparagraph (C), by striking out "The total" and 
inserting in lieu thereof "Subject to sections lOOlA through 
lOOlC, the total"; and 

(3) by inserting after section 1001 the following new section: 

7 use 1308-1. "SEC. lOOlA. PREVENTION OF CREATION OF ENTITIES TO QUALIFY AS 

SEPARATE PERSONS; PAYMENTS LIMITED TO ACTIVE 
FARMERS. 

"(a) Prevention of Creation of Entities to Quaufy as Sepa- 
rate Persons. — For the purposes of preventing the use of multiple 
legal entities to avoid the effective application of the payment 
limitations under section 1001: 

"(1) In general. — A person (as defined in section 1001(5)(B)(i)) 
that receives farm program payments (as described in para- 
graphs (1) and (2) of this section as being subject to limitation) 



7 use 1444e 
note. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-13 



for a crop year under the Agricultural Act of 1949 (7 U.S.C. 1421 
et seq.) may not also hold, directly or indirectly, substantial 
beneficial interests in more than two entities (as defined in 
section 1001(5)(B)(i)(II)) engaged in farm operations that also 
receive such payments as separate persons, for the purposes of 
the application of the limitations under section 1001. A person 
that does not receive such payments for a crop year may not 
hold, directly or indirectly, substantial beneficial interests in 
more than three entities that receive such payments as separate 
persons, for the purposes of the application of the limitations 
under section 1001. 

"(2) Minimal beneficial interests.— For the purpose of this 
subsection, a beneficial interest in any entity that is less than 10 
percent of all beneficial interests in such entity combined shall 
not be considered a substantial beneficial interest, unless the 
Secretary determines, on a case-by-case basis, that a smaller 
percentage should apply to one or more beneficial interests to 
ensure that the purpose of this subsection is achieved. 

"(3) Notification by entities.— To facilitate administration 
of this subsection, each entity receiving such pajonents as a 
separate person shall notify each individual or other entity that 
acquires or holds a substantial beneficial interest in it of the 
requirements and limitations under this subsection. Each such 
entity receiving payments shall provide to the Secretary of 
Agriculture, at such times and in such manner as prescribed by 
the Secretary, the name and social security number of each 
individual, or the name and taxpayer identification number of 
each entity, that holds or acquires a substantial beneficial 
interest. 
"(4) Notification of interest.— 

"(A) In general. — If a person is notified that the person 
holds substantial beneficial interests in more than the 
number of entities receiving payments that is permitted 
under this subsection for the purposes of the application of 
the limitations under section 1001, the person immediately 
shall notify the Secretary, designating those entities that 
should be considered as permitted entities for the person for 
purposes of applying the limitations. Each remaining entity 
in which the person holds a substantial beneficial interest 
shall be subject to reductions in the payments to the entity 
subject to limitation under section 1001 in accordance with 
this subparagraph. Each such pa3nnent applicable to the 
entity shall be reduced by an amount that bears the same 
relation to the full payment that the person's beneficial 
interest in the entity bears to all beneficial interests in the 
entity combined. Before making such reductions, the Sec- 
retary shall notify all individuals or entities affected 
thereby and permit them to adjust among themselves their 
interests in the designated entity or entities. 

"(B) Notice not provided. — If the person does not so 
notify the Secretary, all entities in which the person holds 
substantial beneficial interests shall be subject to reduc- 
tions in the per person limitations under section 1001 in the 
manner described in subparagraph (A). Before making such 
reductions, the Secretary shall notify all individuals or 
entities affected thereby and permit them to adjust among 



101 STAT. 1330-14 PUBLIC LAW 100-203— DEC. 22, 1987 

themselves their interests in the designated entity or 
entities.". 

SEC. 1302. PAYMENTS LIMITED TO ACTIVE FARMERS. 

Effective beginning with the 1989 crops, section lOOlA of the Food 
Security Act of 1985, as added by section 1301, is amended by adding 
at the end the following: 
"(b) Payments Limited to Active Farmers.— 

"(1) In general.— To be separately eligible for farm program 
payments (as described in paragraphs (1) and (2) of section 1001 If 
as being subject to limitation) under the Agricultural Act of ' 
1949 with respect to a particular farming operation (whether in 
the person's own right or as a partner in a general partnership, 
a grantor of a revocable trust, a participant in a joint venture, 
or a participant in a similar entity (as determined by the 
Secretary) that is the producer of the crops involved), a person 
must be an individual or entity described in section 1001(5)(B)(i) 
and actively engaged in farming with respect to such operation, 
as provided under paragraphs (2), (3), and (4). 

"(2) General classes actively engaged in farming.^— For 
the purposes of paragraph (1), except as otherwise provided in 
paragraph (3): 

'*(A) Individuals.— An individual shall be considered to 
be actively engaged in farming with respect to a farm 
operation if — 

"(i) the individual makes a significant contribution 
(based on the total value of the farming operation) of — 
"(I) capital, equipment, or land; and 
"(II) personal labor or active personal manage- 
ment; 

to the farming operation; and 

"(ii) the individual's share of the profits or losses 
from the farming operation is commensurate with the 
individual's contributions to the operation; and 
"(iii) the individual's contributions are at risk. 
"(B) Corporations or other entities. — A corporation or 
other entity described in section 1001(5)(B)(i)(II) shall be 
considered as actively engaged in farming with respect to a 
farming operation if— 

"(i) the entity separately makes a significant con- 
tribution (based on the total value of the farming oper- 
ation) of capital, equipment, or land; 

"(ii) the stockholders or members collectively make a 
significant contribution of personal labor or active per- 
sonal management to the operation; and 

"(iii) the standards provided in clauses (ii) and (iii) of 
paragraph (A), as applied to the entity, are met by the 
entity. 

"(C) Entities making significant contributions.— If a 
general partnership, joint venture, or similar entity (as 
determined by the Secretary) separately makes a signifi- 
cant contribution (based on the total value of the farming 
operation involved) of capital, equipment, or land, and the 
standards provided in clauses (ii) and (iii) of paragraph (A), 
as applied to the entity, are met by the entity, the partners 



3 Copy read "Classes Actively Engaged in Farming". 



PUBLIC LAW 100-203— DEC, 22, 1987 101 STAT. 1330-15 



or members making a significant contribution of personal 
labor or active personal management shall be considered to 
be actively engaged in farming with respect to the farming 
operation involved. 

"(D) Equipment and personal labor. — In making deter- 
minations under this subsection regarding equipment and 
personal labor, the Secretary shall take into consideration 
the equipment and personal labor normally and customar- 
ily provided by farm operators in the area involved to 
produce program crops. 
"(3) Special classes actively engaged in farming. — Not- 
withstanding paragraph (2), the following persons shall be 
considered to be actively engaged in farming with respect to a 
farm operation: 

"(A) Landowners. — A person that is a landowner 
contributing the owned land to the farming operation if the 
landowner receives rent or income for such use of the land 
based on the land's production or the operation's operating 
results, and the person meets the standard provided in 
clauses (ii) and (iii) of paragraph (2)(A). 

"(B) Family members.— With respect to a farming oper- 
ation conducted by persons, a majority of whom are individ- 
uals who are family members, an adult family member who 
makes a significant contribution (based on the total value of 
the farming operation) of active personal management or 
personal labor and, with respect to such contribution, who 
meets the standards provided in clauses (ii) and (iii) of 
paragraph (2)(A). For the purposes of the preceding sen- 
tence, the term 'family member' means an individual to 
whom another family member in the farming operation is 
related as lineal ancestor, lineal descendant, or sibling 
(including the spouses of those family members who do not 
make a significant contribution themselves). 

"(C) Sharecroppers.— A sharecropper who makes a 
significant contribution of personal labor to the farming 
operation and, with respect to such contribution, who meets 
the standards provided in clauses (ii) and (iii) of paragraph 
(2)(A). 

"(4) Persons not actively engaged in farming.— For the 
purposes of paragraph (1), except as provided in paragraph (3), 
the following persons shall not be considered to be actively 
engaged in farming with respect to a farm operation: 

"(A) Landlords.— A landlord contributing land to the 
farming operation if the landlord receives cash rent, or a 
crop share guaranteed as to the amount of the commodity 
to be paid in rent, for such use of the land. 

"(B) Other persons.— Any other person, or class of per- 
sons, determined by the Secretary as failing to meet the 
standards set out in paragraphs (2) and (3). 
"(5) Custom farming services,— A person receiving custom 
farming services will be considered separately eligible for pay- 
ment limitation purposes if such person is actively engaged in 
farming based on paragraphs (1) through (3). No other rules 
with respect to custom farming shall apply.". 



101 STAT. 1330-16 PUBLIC LAW 100-203— DEC. 22, 1987 



SEC. 1303. DEFINITION OF PERSON: ELIGIBLE INDIVIDUALS AND ENTI- 
TIES; RESTRICTIONS APPLICABLE TO CASH-RENT TENANTS. 

7 use 1308 note. Effective beginning with the 1989 crops: 

(a) In General.— Section 1001(5) of the Food Security Act of 1985 
(7 U.S.C. 1308(5)) is amended— 

(1) by inserting after the first sentence of subparagraph (A) 
Regulations. the following new sentence: "Such regulations shall incorporate 

the provisions in subparagraphs (B) through (E) of this para- 
graph, paragraphs (6) and (7), and sections lOOlA through 
lOOlC"; 

(2) by striking out the second sentence of subparagraph (A) 
and inserting in lieu thereof the following new subparagraph: 

"(B)(i) For the purposes of the regulations issued under subpara- 
graph (A), subject to clause (ii), the term 'person' means— 

"(I) an individual, including any individual participating in a 
farming operation as a partner in a general partnership, a 
participant in a joint venture, a grantor of a revocable trust, or 
a participant in a similar entity (as determined by the 
Secretary); 

"(II) a corporation, joint stock company, association, limited 
partnership, charitable organization, or other similar entity (as 
determined by the Secretary), including any such entity or 
organization participating in the farming operation as a partner 
in a general partnership, a participant in a joint venture, a 
grantor of a revocable trust, or as a participant in a similar 
entity (as determined by the Secretary); and 

"(III) a State, political subdivision, or agency thereof. 
"(ii)(I) Such regulations shall provide that the term 'person' does 
not include any cooperative association of producers that markets 
commodities for producers with respect to the commodities so mar- 
keted for producers. 

"(II) In defining the term 'person' as it will apply to irrevocable 
trusts and estates, the Secretary shall ensure that fair and equitable 
treatment is given to trusts and estates and the beneficiaries 
thereof. 

"(iii) Such regulations shall provide that, with respect to any 
married couple, the husband and wife shall be considered to be one 
person, except that any married couple consisting of spouses v.'ho, 
prior to their marriage, were separately engaged in unrelated farm- 
ing operations, each spouse shall be treated as a separate person 
with respect to the farming operation brought into the marriage by 
such spouse so long as such operation remains as a separate farming 
operation, for the purposes of the application of the limitations 
under this section."; 

(3) by redesignating subparagraph (B) as subparagraph (C); 
and 

(4) by adding at the end thereof the following new subpara- 
graphs: 

"(D) Any person that conducts a farming operation to produce a 
crop subject to limitations under this section as a tenant that rents 
the land for cash (or a crop share guaranteed as to the amount of the 
commodity to be paid in rent) and that makes a significant contribu- 
tion of active personal management but not of personal labor shall 
be considered the same person as the landlord unless the tenant 
makes a significant contribution of equipment used in the farming 
operation. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-17 



"(E) The Secretary may not approve (for purposes of the applica- 
tion of the limitations under this section) any change in a farming 
operation that otherwise will increase the number of persons to 
which the limitations under this section are applied unless the 
Secretary determines that the change is bona fide and substantive. 
In the implementation of the preceding sentence, the addition of a 
family member to a farming operation under the criteria set out in 
section 1001A(b)(lXB) shall be considered a bona fide and sub- 
stantive change in the farming operation.". 

(b) Lands Owned by States, Poutical Subdivisions, and Pubuc 
Schools.— Paragraph (6) of section 1001 of the Food Security Act of 
1985 (7 U.S.C. 1308(6)) is amended to read as follows: 

"(6) The provisions of this section that limit payments to any 
person shall not be applicable to land owned by a public school 
district or land owned by a State that is used to maintain a public 
school.". 

SEC. 1304. MORE EFFECTIVE AND UNIFORM APPLICATION OF PAYMENT 
LIMITATIONS. 

(a) Education Program. 7 use 1308 note. 

(1) In general. — The Secretary of Agriculture shall imple- 
ment a payment provisions education program for appropriate 
personnel of the Department of Agriculture and members and 
other personnel of local, county, and State committees estab- 
lished under section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)), for the purpose of fostering 
more effective and uniform application of the payment limita- 
tions and restrictions under sections 1001 through lOOlC of the 
Food Security Act of 1985. 

(2) Training. — The education program shall provide training 
to such personnel in the fair, accurate, and uniform application 
to individual farming operations of the provisions of law and 
regulation relating to the payment provisions of sections 1001 
through lOOlC of the Food Security Act of 1985. Particular 
emphasis shall be given to the changes in the law made by 
sections 1301, 1302, and 1303 of this Act. 

(3) Implementation.— The education program shall be fully 
implemented, and the training completed, not later than 30 
days after the date final regulations are issued to carry out the 
amendments made by this subtitle. 

(4) Commodity Credit Corporation.— The Secretary shall 
carry out the program provided under this subsection through 
the Commodity Credit Corporation. 

(b) Schemes or Devices.— Effective beginning with the 1989 crops, 
the Food Security Act of 1985 is amended by inserting after section 
lOOlA, as added by sections 1301 and 1302 of this Act, the following 
new section: 

"SEC. lOOlB. SCHEMES OR DEVICES. 7 USC 1308-2. 

"If the Secretary of Agriculture determines that any person has 
adopted a scheme or device to evade, or that has the purpose of 
evading, section 1001, lOOlA, or lOOlC, such person shall be ineli- 
gible to receive farm program payments (as described in paragraphs 
(1) and (2) of section 1001 as being subject to limitation) applicable to 
the crop year for which such scheme or device was adopted and the 
succeeding crop year.". 



101 STAT. 1330-18 PUBLIC LAW 100-203— DEC. 22, 1987 



SEC. 1305. REGULATIONS; TRANSITION RULES; EQUITABLE ADJUST- 
MENTS. 

7 use 1308 note. (a) REGULATIONS.— 

(1) Issuance.— The Secretary of Agriculture shall issue— 

(A) proposed regulations to carry out the amendments 
made by this subtitle not later than April 1, 1988; and 

(B) final regulations to carry out such amendments not 
later than August 1, 1988. 

(2) Field instructions.— Any field instructions relating to, or 
other supplemental clarifications of, the regulations issued 
under sections 1001 through lOOlC of the Food Security Act of 
1985 shall not be used in resolving issues involved in the 
application of the payment limitations or restrictions under 
such sections or regulations to individuals, other entities, or 
farming operations until copies of the publication are made 
available to the public. 

(h) Allowance for Equitable Reorganizations.— To allow for 
the equitable reorganization of farming operations to conform to the 
limitations and restrictions contained in the amendments made to 
the Food Security Act of 1985 by this subtitle in cases in which the 
application of such limitations and restrictions will reduce pay- 
ments to the farming operation (as determined by the Secretary), 
the Secretary may waive the application of the substantive change 
rule under section 1001(5)(E), as added by section 1303 of this Act, or 
any regulation of the Secretary containing a comparable rule, to any 
reorganization applied for prior to the final date when producers are 
eligible to enter into contracts to participate in the commodity 
programs established for the 1989 crop year, to the extent the 
Secretary determines appropriate to facilitate any such equitable 
reorganizations that does not increase such payments. 

(c) Good Faith Reliance on Official Advice. — Section 1001 of 
the Food Security Act of 1985 (7 U.S.C. 1308) is amended by adding 
at the end thereof the following new paragraph: 

"(7) Regulations of the Secretary shall establish time limits for the 
various steps involved with notice, hearing, decision, and the ap- 
peals procedure in order to ensure expeditious handling and settle- 
ment of payment limitation disputes. Notwithstanding any other 
provision of law, actions taken by an individual or other entity in 
good faith on action or advice of an authorized representative of the 
Secretary may be accepted as meeting the requirement under this 
section or section 1001 A, to the extent the Secretary deems it 
desirable in order to provide fair and equitable treatment.". 
Contracts. (d) CONSERVATION RESERVE APPLICATION.— Notwithstanding sec- 

7 use 1308 note, tion 1234(0(2) of the Food Security Act of 1985 (16 U.S.C. 3834(D), 
paragraphs (5) through (7) of section 1001, as amended by this 
subtitle, and sections lOOlA through lOOlC, of the Food Security Act 
of 1985 shall apply to the conservation reserve program under 
subtitle D of title XII of such Act (16 U.S.C. 3831 et seq.) with respect 
to rental payments to persons under contracts entered into after the 
date of the enactment of this Act, except with respect to landlords 
that receive cash rent, or a crop share guaranteed as to the amount 
of the commodity to be paid in rent, for the use of the land. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-19 



SEC 1306. FOREIGN PERSONS MADE INELIGIBLE FOR PROGRAM BENE- 
FITS. 

Effective beginning with the 1989 crops, the Food Security Act of 
1985 is amended by inserting after section lOOlB, as added by 
section 1304 of this Act, the following new section: 

"SEC. lOOlC. FOREIGN PERSONS MADE INELIGIBLE FOR PROGRAM 7 USC 1308-3. 
BENEFITS. 

"Notwithstanding any other provision of law: 

"(a) In General. — For each of the 1989 and 1990 crops, any person 
who is not a citizen of the United States or an alien lawfully 
admitted into the United States for permanent residence under the 
Immigration and Nationality Act (8 U.S.C. 1101 et seq.) shall be 
ineligible to receive any type of production adjustment payments, 
price support program loans, payments, or benefits made available 
under the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), the 
Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq.), or 
subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C 
3831 et seq.) with respect to any commodity produced, or land set 
aside from production, on a farm that is owned or operated by such 
person, unless such person is an individual who is providing land, 
capital, and a substantial amount of personal labor in the produc- 
tion of crops on such farm. 

"(b) Corporations or Other Entities.— For purposes of subsec- 
tion (a), a corporation or other entity shall be considered a person 
that is ineligible for production adjustment payments, price support 
program loans, payments, or benefits if more than 10 percent of the 
beneficial ownership of the entity is held by persons who are not 
citizens of the United States or aliens lawfully admitted into the 
United States for permanent residence under the Immigration and 
Nationality Act, unless such persons provide a substantial amount 
of personal labor in the production of crops on such farm. Notwith- 
standing the foregoing provisions of this subsection, with respect to 
an entity that is determined to be ineligible to receive such pay- 
ments, loans, or other benefits, the Secretary may make payments, 
loans, and other benefits in an amount determined by the Secretary 
to be representative of the percentage interests of the entity that is 
owned by citizens of the United States and aliens lawfully admitted 
into the United States for permanent residence under the Immigra- 
tion and Nationality Act. 

"(c) Prospective Appucation. — No person shall become ineligible Contracts, 
under this section for production adjustment payments, price sup- 
port program loans, payments or benefits as the result of the 
production of a crop of an agricultural commodity planted, or 
commodity program or conservation reserve contract entered into, 
before the date of the enactment of this section.". 

SEC. 1307. HONEY LOAN LIMITATION. 

Section 1001(2)(C) of the Food Security Act of 1985 (7 U.S.C. 
1308(2)(C)) is amended— 

(1) by striking out clause (i); and 

(2) in clause (ii), by striking out "(ii)". 



101 STAT. 1330-20 PUBLIC LAW 100-203— DEC. 22, 1987 



Subtitle D — Rural Electrification 
Administration Programs 

CHAPTER 1— PREPAYMENT OF RURAL ELECTRIFICATION 

LOANS 

7 use 936a note. SEC. 1401. PREPAYMENT OF LOANS. 

(a) Eligibility to Prepay.— Notwithstanding subsections (c), (d), 
and (e) of section 306A of the Rural Electrification Act of 1936 (7 
U.S.C. 936a (c), (d), and (e)), during fiscal year 1988, a borrower of a 
loan made by the Federal Financing Bank and guaranteed under 
section 306 of such Act (7 U.S.C. 936) may, at the option of the 
borrower, prepay such loan (or any loan advance thereunder) in 
accordance with subsections (a) and (b) of section 306A of such Act, 
except that any prepayment that would cause the total amount of 
such prepayments during fiscal year 1988 to exceed $2,000,000,000 
shall be subject solely to the approval of the Secretary of the 
Treasury. 

Ot)) Priority for Approval. — In determining which borrowers 
shall be permitted to prepay loans under subsection (a): 

(1) The Administrator of the Rural Electrification Adminis- 
tration shall give priority to those 8 borrowers that were deter- 
mined by the Administrator, prior to the date of the enactment 
of this Act, to be eligible to prepay, or that prepaid, an advance 
under section 306A of such Act (as in effect prior to the date of 
the enactment of this Act), except that to retain such priority a 
borrower shall — 

Regulations. (A) notify the Administrator in writing, within 30 days 

after the issuance of regulations to carry out this section, of 
the intent of the borrower to prepay; and 

(B) complete such prepayment by disbursing funds to the 
Federal Financing Bank to prepay loan advances within 
120 days after the issuance of such regulations. 

(2) In considering requests for prepayment under subsection 
(a) by borrowers not described in paragraph (1), the Adminis- 
trator shall permit prepayment based on the order in which 
borrowers are prepared to disburse funds to the Federal Financ- 
ing Bank to complete such prepayments. If more than 1 bor- 
rower is so prepared at the same time, and if the combined 
amount of such prepayments would cause the total amount of 
prepayments during fiscal year 1988, under this section, to 
exceed $2,000,000,000, the Administrator shall— 

(A) base the determination on the date on which prepay- 
ment applications have been submitted; or 

(B) permit partial prepayment by two or more borrowers. 

(c) Regulations. — Not later than 30 days after the date of enact- 
ment of this Act, the Administrator of the Rural Electrification 
Administration shall issue such regulations as are necessary to 
carry at this section. 

(d) Study. — Not later than January 1, 1989, the Comptroller 
General of the United States shall — 

(1) study— 

(A) all benefits provided by Federal Financing Bank lend- 
ing and the procedures and conditions for the prepayment 
of current Federal Financing Bank loans; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-21 



(B) the benefits and costs to Fede Financing Bank 
borrowers of making prepayments; and 

(C) alternative conditions and procedures for prepayment 
of all Federal Financing Bank loans to balance Federal 
benefits with Federal costs; and 

(2) submit to Congress a report describing the results of such Reports, 
study, together with any appropriate recommendations. 

SEC. 1402. USE OF FUNDS. 

The Rural Electrification Act of 1936 is amended by inserting 
after section 311 (7 U.S.C. 940a) the following new section: 

"SEC. 312. USE OF FUNDS. 7 USC 940b. 

"A borrower of an insured or guaranteed electric loan under this 
Act may, without restriction or prior approval of the Administrator, 
invest its own funds or make loans or guarantees, not in excess of 15 
percent of its total utility plant.". 

SEC. 1403. CUSHION OF CREDIT PAYMENTS PROGRAM. 

Title III of the Rural Electrification Act of 1936 (as amended by 
section 1402 of this Act) is amended by adding at the end thereof the 
following new section: 

"SEC. 313. CUSHION OF CREDIT PAYMENTS PROGRAM. 7 USC 940c 

"(a) ESTABUSHMENT. — 

"(1) In general. — The Administrator shall develop and pro- 
mote a program to encourage borrowers to voluntarily make 
deposits into cushion of credit accounts established within the 
Rural Electrification and Telephone Revolving Fund. 

"(2) Interest. — Amounts in each cushion of credit account 
shall accrue interest to the borrower at a rate of 5 percent per 
annum. 

"(3) Balance. — A borrower may reduce the balance of its 
cushion of credit account only if the amount obtained from the 
reduction is used to make scheduled payments on loans made or 
guaranteed under this Act. 
"Oj) Uses of Cushion of Credit Payments.— 
"(1) In general. — 

"(A) Cash balance.— Cushion of credit payments shall be 
held in the Rural Electrification and Telephone Revolving 
Fund as a cash balance in the cushion of credit accounts of 
borrowers. 

"(B) Interest. — All cash balance amounts (obtained from 
cushion of credit payments, loan payments, and other 
sources) held by the Fund shall bear interest to the Fund at 
a rate equal to the weighted average rate on outstanding 
certificates of beneficial ownership issued by the Fund. 

"(C) Credits.— The amount of interest accrued on the 
cash balances shall be credited to the Fund as an offsetting 
reduction to the amount of interest paid by the Fund on its 
certificates of beneficial ownership. 
"(2) Rural economic development subaccount. — 

"(A) Maintenance of account.— The Administrator 
shall maintain a subaccount within the Rural Electrifica- 
tion and Telephone Revolving Fund to which shall be cred- 
ited, on a monthly basis, a sum determined by multiplying 
the outstanding cushion of credit payments made after 



101 STAT. 1330-22 PUBLIC LAW 100-203— DEC. 22, 1987 



October 1, 1987, by the difference (converted to a monthly 
basis) between the average weighted interest rate paid on 
outstanding certificates of beneficial ownership issued by 
the Fund and the 5 percent rate of interest provided to 
borrowers on cushion of credit payments. 

"(B) Grants.— The Administrator is authorized, from the 
interest differential sums credited this subaccount and from 
any other funds made available thereto, to provide grants 
or zero interest loans to borrowers under this Act for the 
purpose of promoting rural economic development and job 
creation projects, including funding for project feasibility 
studies, start-up costs, incubator projects, and other 
reasonable expenses for the purpose of fostering rural 
development, 

"(C) Repayments. — In the case of zero interest loans, the 
Administrator shall establish such reasonable repayment 
terms as will ensure borrower participation. 

"(D) Proceeds. — All proceeds from the repayment of such 
loans shall be returned to the subaccount. 

"(E) Number of grants. — Such loans and grants shall be 
made uuring each fiscal year to the full extent of the 
amounts held by the rural economic development 
subaccount, subject only to limitations as may be from time- 
to-time imposed by law.". 

CHAPTER 2— RURAL TELEPHONE BANK BORROWERS 

SEC. 1411. RURAL TELEPHONE BANK INTEREST RATES AND LOAN 
PREPAYMENTS. 

7 use 948 note. (a) FINDINGS.— Congress finds that— 

(1) overcharging of Rural Telephone Bank borrowers has 
resulted in $179,000,000 in excess profits and has imperiled 
borrowers by raising costs to ratepayers; 

(2) borrowers will be able to seek redress under section 
408(b)(3)(G) of the Rural Electrification Act of 1936, as added by 
subsection (c), or may leave the Rural Telephone Bank, but in 
no case may the Governor of the Bank issue regulations requir- 
ing any penalty from borrowers seeking to retire debt prior to 
maturity; and 

(3) any reduction in Federal Government * expenditures in 
the operation of the Rural Telephone Bank, from borrowers' 
conduct resulting from the implementation of the amendments 
made by subsections (b) and (c), should be included in all 
calculations of the budget of the United States Government, 
authorized under the ^ Balanced Budget and Emergency Deficit 
Control Reaffirmation Act of 1987. 

(b) Rural Telephone Bank Loan Prepayments. — ^ 

(1) Prepayments authorized.— Section 408(b) of the Rural 
Electrification Act of 1936 (7 U.S.C. 948(b)) is amended by 
adding at the end the following new paragraph: 

"(8) A borrower with a loan from the Rural Telephone Bank 
may prepay such loan (or any part thereof) by paying the face 
amount thereof without being required to pay the prepayment 



* Copy read "government". 
■•"Copy read "under of the". 

* Copy read "Prepayments.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-z8 

penalty set forth in the note covering such loan, if such prepay- 
ment is not made later than September 30, 1988.". 

(2) Prepayment regulations.— The Governor of the Rural 7 USC 948 note. 
Telephone Bank shall issue regulations to carry out the amend- 
ment made by paragraph (1) within 30 days after the date of 
enactment of this Act. Such regulations shall implement the 
amendment made by paragraph (1) without the addition of any 
restrictions not set forth in such amendment, 
(c) Determination of Interest Rates on Rural Telephone Bank 

Loans. — Paragraph (3) of section 4080)) of the Rural Electrification 

Act of 1936 (7 U.S.C. 948(b)(3)) is amended— 

(1) by inserting **(A)" after the paragraph designation; 
and 

(2) by adding at the end thereof the following new 
subparagraphs: 

"(B) On and after the date of the enactment of this paragraph, 
advances made on or after such date of enactment under loan 
commitments made on or after October 1, 1987, shall bear 
interest at the rate determined under subparagraph (C), but in 
no event at a rate that is less than 5 percent per annum. 
"(C) The rate determined under this subparagraph shall be — 
"(i) for the period beginning on the date the advance is 
made and ending at the close of the fiscal year in which 
the advance is made, the average yield (on the date of the 
advance) on outstanding marketable obligations of the 
United States having a final maturity comparable to the 
final maturity of the advance; and 

"(ii) after the fiscal year in which the advance is made, 
the cost of money rate for such fiscal year, as determined 
under subparagraph (D). 
"(D) Within 30 days after the end of each fiscal year, the 
Governor shall determine to the nearest 0.01 percent the cost of 
money rate for the fiscal year, by calculating the sum of the 
results of the following calculations: 

"(i) The aggregate of all amounts received by the tele- 
phone bank during the fiscal year from the issuance of class 
A stock, multiplied by tHe rate of return payable by the 
telephone bank during the fiscal year, as specified in sec- 
tion 406(c), to holders of class A stock, which product is 
divided by the aggregate of the amounts advanced by the 
telephone bank during the fiscal year. 

"(ii) The aggregate of all amounts received by the tele- 
phone bank during the fiscal year from the issuance of class 
B stock, multiplied by the rate at which dividends are 
payable by the telephone bank during the fiscal year, as 
specified in section 406(d), to holders of class B stock, which 
product is divided by the aggregate of the amounts ad- 
vanced by the telephone bank during the fiscal year. 

"(iii) The aggregate of all amounts received by the tele- 
phone bank during the fiscal year from the issuance of class 
C stock, multiplied by the rate at which dividends are 
payable by the telephone bank during the fiscal year, under 
section 406(e), to holders of class C stock, which product is 
divided by the aggregate of the amounts advanced by the 
telephone bsink during the fiscal year. 

"(ivXD The sum of the results of the calculations de- 
scribed in subclause (II). 



101 STAT. 1330-24 PUBLIC LAW 100-203— DEC. 22, 1987 

"(II) The amounts received by the telephone bank during 
the fiscal year from each issue of telephone debentures and | 
other obligations of the telephone bank, multiplied, respec- i 
tively, by the rates at which interest is payable during the i 
fiscal year by the telephone bank to holders of each issue,' 
each of which products is divided, respectively, by the-, 
aggregate of the amounts advanced by the telephone bank 
during the fiscal year. 

"(vXD The amount by which the aggregate of the amounts 
advanced by the telephone bank during the fiscal year 
exceeds the aggregate of the amounts received by the tele- 
phone bank from the issuance of class A stock, class B 
stock, class C stock, and telephone debentures and other 
obligations of the telephone bank during the fiscal year, 
multiplied by the historic cost of money rate as of the close 
of the fiscal year immediately preceding the fiscal year, 
which product is divided by the aggregate of the amounts 
advanced by the telephone bank during the fiscal year, 

"(II) For purposes of this clause, the term 'historic cost of 
money rate', with respect to the close of a preceding fiscal 
year, means the sum of the results of the following calcula- 
tions: The amounts advanced by the telephone bank in each 
fiscal year during the period beginning with fiscal year 1974 
and ending with the preceding fiscal year, multiplied, 
respectively, by the cost of money rate for the fiscal year (as 
set forth in the table in subparagraph (E)) for fiscal years 
1974 through 1987, and as determined by the Governor 
under this subparagraph for fiscal years after fiscal year 
1987), each of which products is divided, respectively, by the 
aggregate of the amounts advanced by the telephone bank 
during the period. 

"(E) For purposes of subparagraph (D)(II), the cost of 
money rate for the fiscal years in which each advance was 
made shall be as set forth in the following table: 

The cost of money 



"For advances made in — rate shall be — 

Fiscal year 1974 5.01 percent 

Fiscal year 1975 5.85 percent 

Fiscal year 1976 5.33 percent 

Fiscal year 1977 5.00 percent 

Fiscal year 1978 5.87 percent 

Fiscal year 1979 5.93 percent 

Fiscal year 1980 8.10 percent 

Fiscal year 1981 9.46 percent 

Fiscal year 1982 8.39 percent 

Fiscal year 1983 6.99 percent 

Fiscal year 1984 6.55 percent 

Fiscal year 1985 5.00 percent 

Fiscal year 1986 5.00 percent 

Fiscal year 1987 5.00 percent. 



For purposes of this subparagraph, the term 'fiscal year' means 
the 12-month period ending on September 30 of the designated 
year. 

"(F)(i) Notwithstanding subparagraph (B), if a borrower holds 
a commitment for a loan under this section made on or after 
October 1, 1987, and before the date of the enactment of this 
paragraph, part or all of the proceeds of which have not been 
advanced as of such date of enactment, the borrower may, until 
the later of the date the next advance under the loan commit- 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-25 



ment is made or 90 days after such date of enactment, elect to 
have the interest rate specified in the loan commitment apply to 
the unadvanced portion of the loan in lieu of the rate which (but 
for this clause) would apply to the unadvanced portion under 
this paragraph. If any borrower makes an election under this 
clause with respect to a loan, the Governor shall adjust the 
interest rate which applies to the unadvanced portion of the 
loan accordingly. 

"(iiXD If the telephone bank, pursuant to section 407(b), issues 
telephone debentures on any date to refinance telephone deben- 
tures or other obligations of the telephone bank, the telephone 
bank shall, in addition to any interest rate reduction required 
by any other provision of this paragraph, for the period ap- 
plicable to the advance, reduce the interest rate charged on 
each advance made under this section during the fiscal year in 
which the refinanced debentures or other obligations were origi- 
nally issued by the amount applicable to the advance. 

"(II) For purposes of subclause (I), the term 'the period ap- 
plicable to the advance' means the period beginning on the issue 
date described in subclause (I) and ending on the earlier of the 
date the advance matures or is completely prepaid. 

"(Ill) For purposes of subclause (I), the term 'the amount 
applicable to the advance' means an amount which fully reflects 
that percentage of the funds saved by the telephone bank as a 
result of the refinancing which is equal to the percentage 
representation of the advance in all advances described in 
subclause (I). 

"(IV) Within 60 days after any issue date described in 
subclause (I), the Governor shall amend the loan documentation 
for each advance described in subclause (I), as necessary, to 
reflect any interest rate reduction applicable to the advance by 
reason of this clause, and shall notify each affected borrower of 
the reduction. 

"(G) Within 30 days after the publication of any determina- 
tion made under subparagraph (D), any affected borrower may 
obtain review of the determination, or any other equitable relief 
as may be determined appropriate, by the United States court of 
appeals for the judicial circuit in which the borrower does 
business by filing a written petition requesting the court to set 
aside or modify such determination. On receipt of such a peti- 
tion, the clerk of the court shall transmit a copy of the petition 
to the Governor. On receipt of a copy of such a petition from the 
clerk of the court, the Governor shall file with the court 
the record on which the determination is based. The court 
shall have jurisdiction to affirm, set aside, or modify the 
determination. 

"(K) Within 5 days after determining the cost of money rate 
for a fiscal year, the Governor shall — 

"(i) cause the determination to be published in the Fed- 
eral Register in accordance with section 552 of title 5, 
United States Code; and 

"(ii) furnish a copy of the determination to the Comptrol- 
ler General of the United States. 
"(I) The Comptroller General shall review, on an expedited Reports 
basis, each determination a copy of which is received from the 
Governor and, within 15 days after the date of such receipt, 
furnish Congress a report on the accuracy of the determination. 



Federal 
Register, 
publication. 



101 STAT. 1330-26 PUBLIC LAW 100-203— DEC. 22, 1987 



"(J) The telephone bank shall not sell or otherwise dispose of 
any loan made under this section, except as provided in this 
paragraph.". 

SEC. 1412. INTEREST RATE TO BE CONSIDERED FOR PURPOSES OF 
ASSESSING ELIGIBILITY FOR LOANS. 

Paragraph (4) of section 408(b) of the Rural Electrification Act of 
1936 (7 U.S.C. 948(b)(4)) is amended by inserting at the end the 
following: "For purposes of determining the creditworthiness of a 
borrower for a loan under this paragraph, the Governor shall 
assume that the loan, if made, would bear interest at a rate equal to 
the average yield (on the date of the determination) on outstanding 
marketable obligations of the United States having a final maturity 
comparable to the final maturity of the loan.". 

SEC. 1413. ESTABLISHMENT OF RESERVE FOR LOSSES DUE TO INTEREST 
RATE FLUCTUATIONS. 

(a) EsTABUSHMENT OF RESERVE; FUNDING.— Section 406 of the 
7 use 946. Rural Electrification Act of 1936 (7 U.S.C. 947) is amended by adding 

at the end the following: 

"(h) There is hereby established in the telephone bank a reserve 
for losses due to interest rate fluctuations. Within 30 days after the 
date of the enactment of this subsection, the Governor of the 
telephone bank shall transfer to the reserve for losses due to in- 
terest rate fluctuations all amounts in the reserve for contingencies 
as of the date of the enactment of this subsection. Amounts in the 
reserve for interest rate fluctuations may be expended only to cover 
operating losses of the telephone bank (other than losses attrib- 
utable to loan defaults) and only after taking into consideration any 
recommendations made by the General Accounting Office under 
section 1413(b) of the Rural Telephone Bank Borrowers Fairness Act 
of 1987.". 

Reports. (b) Study by General Accounting Office. — Within 180 days 

after the date of the enactment of this Act, the General Accounting 
Office shall complete a study of operations of the telephone bank 
and report its recommendations to the Committees on Agriculture 
and Government Operations of the House of Representatives and 
the Committee on Agriculture, Nutrition, and Forestry of the 
Senate with respect to — 

(1) the appropriate level of funding for the reserve for losses 
due to interest rate fluctuations established in section 406(h) of 
the Rural Electrification Act of 1936 (7 U.S.C. 947(h)) (as added 
by subsection (a)); 

(2) the circumstances under which amounts in the reserve for 
losses due to interest rate fluctuations should be expended; 

(3) the circumstances under which amounts should be added 
to the reserve for losses due to interest rate fluctuations; and 

(4) the disposition of excess reserves. 

In such study, the General Accounting Office shall consider the 
effects of such recommendations on telephone bank borrowers, the 
subscribers of such borrowers, and the United States Government, 
(c) Limitation on Estabushment of New Reserves.— Subsection 
7 use 946. (g) of section 406 of the Rural Electrification Act of 1936 (7 U.S.C. 
947(g)) is amended— 

(1) by striking out "reserves for losses," and inserting in lieu 
thereof *'the reserve for loan losses,"; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-27 



(2) by adding at the end the following: "The telephone bank 
may not establish any reserve other than the reserves referred 
to in this subsection and in subsection (h).". 

SEC. 1414. PUBLICATION OF RURAL TELEPHONE BANK POLICIES AND 
REGULATIONS. 

Notwithstanding the exemption contained in section 553(a)(2) of 
title 5, United States Code, the Governor of the telephone bank shall 
cause to be published in the Federal Register, in accordance with 
section 553 of title 5, United States Code, all rules, regulations, 
bulletins, and other written policy standards governing the oper- 
ation of the telephone bank's programs relating to public property, 
loans, grants, benefits, or contracts. After September 30, 1988, the 
telephone bank may not deny a loan or advance to, or take any 
other adverse action against, any applicant or borrower for any 
reason which is based upon a rule, regulation, bulletin, or other 
written policy standard which has not been published pursuant to 
such section. 



Federal 

Register, 

publication. 

Grants. 

Contracts. 

7 use 944a. 



Subtitle E — Miscellaneous 



SEC. 1501. MARKETING ORDER PENALTIES. 

Section 8c(14) of the Agricultural Adjustment Act of 1933 (7 U.S.C. 
608c(14)), reenacted with amendments by the Agricultural Market- 
ing Agreement Act of 1937, is amended — 

(1) by inserting "(A)" before "Any"; and 

(2) by adding at the end thereof the following new 
subparagraph: 

"(B) Any handler subject to an order issued under this section, or 
any officer, director, agent, or employee of such handler, who vio- 
lates any provision of such order (other than a provision calling for 
payment of a pro rata share of expenses) may be assessed a civil 
penalty by the Secretary not exceeding $1,000 for each such viola- 
tion. Each day during which such violation continues shall be 
deemed a separate violation, except that if the Secretary finds that a 
petition pursuant to paragraph (15) was filed and prosecuted by the 
handler in good faith and not for delay, no civil penalty may be 
assessed under this paragraph for such violations as occurred be- 
tween the date on which the handler's petition was filed v/ith the 
Secretary, and the date on which notice of the Secretary's ruling 
thereon was given to the handler in accordance with regulations 
prescribed pursuant to paragraph (15). The Secretary may issue an 
order assessing a civil penalty under this paragraph only after 
notice and an opportunity for an agency hearing on the record. Such 
order shall be treated as a final order reviewable in the district 
courts of the United States in any district in which the handler 
subject to the order is an inhabitant, or has the handler's principal 
place of business. The validity of such order may not be reviewed in 
an action to collect such civil penalty.". 

SEC. 1502. STUDY OF USE OF AGRICULTURAL COMMODITY FUTURES AND 
OPTIONS MARKETS. 

The last sentence of section 1742 of the Food Security Act of 1985 
(7 U.S.C. 1421 note) is amended by striking out "1988" and inserting 
in lieu thereof "1989". 



101 STAT. 1330-28 PUBLIC LAW 100-203— DEC. 22, 1987 

SEC. 1503. AUTHORIZATION OF APPROPRIATIONS FOR PHILIPPINE FOOD 

AID INITIATIVE. I 

Section 416(b) of the Agricultural Act of 1949 (7 U.S.C. 1431(b)) is a 
amended by adding at the end thereof the following new paragraph: 

"(12) There is authorized to be appropriated for fiscal year 1988, in 
addition to any other funds authorized to be appropriated, |j 
$1,000,000 for technical assistance for the sale or barter of commod- 
ities under paragraph (7) to strengthen nonprofit private organiza- ^ 
tions and cooperatives in the Philippines.". 

SEC. 1504. RURAL INDUSTRIALIZATION ASSISTANCE. ! 

Section 310B(c) of the Consolidated Farm and Rural Development 
Act (7 U.S.C. 1932(c)) is amended— 

(1) by inserting "and private nonprofit corporations" after I 
"public bodies"; and 

(2) by striking out "to facilitate development of and inserting 
in lieu thereof "to finance and facilitate development of small 
and emerging". 

SEC. 1505. PLANT VARIETY PROTECTION FEES. y 

Section 31 of the Plant Variety Protection Act (7 U.S.C. 2371) is 
amended to read as follows: 

'SEC. 31. PLANT VARIETY PROTECTION FEES. 

"(a) In General. — The Secretary shall, under such regulations as 
the Secretary may prescribe, charge and collect reasonable fees for 
services performed under this Act. 

"(b) Late Payment Penalty.— On failure to pay such fees, the 
Secretary shall assess a late payment p)enalty. Such overdue fees 
shall accrue interest as required by section 3717 of title 31, United 
States Code. 

"(c) Disposition of Funds. — Such fees, late payment penalties, 
and accrued interest collected shall be credited to the account that 
incurs the cost and shall remain available without fiscal year j 
limitation to pay the expenses incurred by the Secretary in carrying I 
out this Act. Such funds collected (including late payment penalties 
and any interest earned) may be invested by the Secretary in ^ 
insured or fully collateralized, interest-bearing accounts or, at the ^ ^ 
discretion of the Secretary, by the Secretary of the Treasury in ^ ^ 
United States Government debt instruments. 

"(d) Actions for Nonpayment.— The Attorney General may ^ 81 
bring an action for the recovery of charges that have not been paid 
in accordance with this Act against any person obligated for pay- ; [j 
ment of such charges under this Act in any United States district 
court or other United States court for any territory or possession in S 
any jurisdiction in which the person is found, resides, or transacts | 
business. The court shall have jurisdiction to hear and decide the ij 
action. 1 

"(e) Authorization of Appropriations.— There are authorized to | ^ 
be appropriated such sums as are necessary to carry out this Act.", jj 

SEC. 1506. ANNUAL APPROPRIATIONS TO REIMBURSE THE COMMODITY ^ 
CREDIT CORPORATION FOR NET REALIZED LOSSES. ' 

(a) In General. — The first sentence of section 2 of Public Law ^ f 
87-155 (15 U.S.C. 713a-ll) is amended by striking out ", commenc- ,j. ^ 
ing with the fiscal year ending June 30, 1961" and inserting in lieu • 
thereof "by means of a current, indefinite appropriation". ..i 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-29 

(b) Operating Expenses. — No funds may be appropriated for 15 use 7i3a-ii 
operating expenses of the Commodity Credit Corporation except as "o^® 
authorized under section 2 of Public Law 87-155 to reimburse the 
Corporation for net realized losses. 

(c) Effective Date. — This section and the amendment made by 15 USC 7l3a-ll 
this section shall apply beginning with fiscal year 1988. 

SEC. 1507. FEDERAL CROP INSURANCE. 7 USC 1508 note. 

It is the sense of Congress that, in carrying out the Federal Crop 
Insurance Act (7 U.S.C. 1501 et seq.), the Federal Crop Insurance 
Corporation — 

(1) should not be required to Eissume 100 percent of all loss 
adjustments in the Federal crop insurance program; and 

(2) should assume and perform the loss adjustment obligations 
of a reinsured company if the Corporation determines that such 
company's loss adjustment performance and practices are not 
carried out in accordance with the applicable reinsurance 
agreement. 

SEC. 1508. ETHANOL USAGE, 42 uSC 7545 

(a) Findings. — Congress finds that— 

(1) the United States is dependent for a large and growing 
share of its energy needs on the Middle East at a time when 
world petroleum reserves are declining; 

(2) the burning of gasoline causes pollution; 

(3) ethanol can be blended with gasoline to produce a cleaner 
source of fuel; 

(4) ethanol can be produced from grain, a renewable resource 
that is in considerable surplus in the United States; 

(5) the conversion of grain into ethanol would reduce farm 
program costs and grain surpluses; and 

(6) increasing the quantity of motor fuels that contain at least 
10 percent ethanol from current levels to 50 percent by 1992 
would create thousands of new jobs in ethanol production 
facilities. 

0)) Sense of Congress. — It is the sense of Congress that the 
Administrator of the Environmental Protection Agency should use 
authority provided under the Clean Air Act (42 U.S.C. 7401 et seq.) 
to require greater use of ethanol as motor fuel. 

SEC. 1509. DEMONSTRATION OF FAMILY INDEPENDENCE PROGRAM. 

The Food Stamp Act of 1977 is amended by adding after section 20 
(7 U.S.C. 2029) the following new section: 

"SEC. 21. DEMONSTRATION OF FAMILY INDEPENDENCE PROGRAM. 7 USC 2030. 

"(a) In General.— Upon written application of the State of 
Washington (in this section referred to as the 'State') and after the 
approval of such application by the Secretary, the State may con- 
duct a Family Independence Demonstration Project (in this section 
referred to as the 'Project') in all or in part of the State in accord- 
ance with this section to determine whether the Project, as an 
alternative to providing benefits under the food stamp program, 
would more effectively break the cycle of poverty and would provide 
families with opportunities for economic independence and strength- 
ened family functioning. 

"(b) Nature of Project. — In an application submitted under 
subsection (a), the State shall provide the following: 



101 STAT. 1330-30 PUBLIC LAW 100-203— DEC. 22, 1987 



"(1) Except as provided in this section, the provisions of 
chapter 434 of the 1987 Washington Laws, as enacted in May 
1987, shall apply to the operation of the Project. 

"(2) All of the following terms and conditions shall be in effect 
under the Project: 

"(A)(i) Except as provided in clause (ii), individuals with 
respect to whom benefits may be paid under part A of title 
IV of the Social Security Act, and such other individuals as 
are included in the Project pursuant to chapter 434 of the 
1987 Washington Laws, as enacted in May 1987, shall be 
eligible to participate in the Project in lieu of receiving 
benefits under the food stamp program and cash assistance 
under any other Federal program covered by the Project. 

"(ii) Individuals who receive only child care or medical 
benefits under the Project shall not be eligible to receive 
food assistance under the Project. Such individuals may 
receive coupons under the food stamp program if eligible. 

"(B) Individuals who participate in the Project shall re- 
ceive for each month an amount of cash assistance that is 
not less than the total value of the assistance such individ- 
uals would otherwise receive, in the aggregate, under the 
food stamp program and any cash-assistance Federal pro- 
gram covered by the Project for such month, including 
income and resource exclusions and deductions, and benefit 
levels. 

**(C)(i) The State may provide a standard benefit for food 
assistance under the Project, except that individuals who 
participate in the Project shall receive as food assistance for 
a month an amount of cash that is not less than the value 
of the assistance such individuals would otherwise receive 
under the food stamp program. 

"(ii) The State may provide a cash benefit for food assist- 
ance equal to the value of the thrifty food plan. 

"(D) Each month participants in the Project shall be 
notified by the State of the amount of Project assistance 
that is provided as food assistance for such month. 

"(E) The State shall have a program to require partici- 
pants to engage in employment and training activities car- 
ried out under chapter 434 of the 1987 Washington Laws, as 
enacted in May 1987.^ 

"(F) Food assistance shall be provided under the Project— 
"(i) to any individual who is accepted for participa- 
tion in the Project, not later than 30 days after such 
individual applies to participate in the Project; 

"(ii) to any participant for the period that begins on 
the date such participant applies to participate in the 
Project, except that the amount of such assistance shall 
be reduced to reflect the pro rata value of any coupons 
received under the food stamp program for such period 
for the benefit of such participant; and 
"(iii) until— 

"(I) the participant's cash assistance under the 
Project is terminated; 



« Copy read "May, 1987.". 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-31 



"(II) such participant is informed of such termi- 
nation and is advised of the eligibility require- 
ments for participation in the food stamp program; 

"(III) the State determines whether such partici- 
pant will be eligible to receive coupons as a 
member of a household under the food stamp pro- 
gram; and 

"(IV) coupons under the food stamp program are 
received by such participant if such participant 
will be eligible to receive coupons as a member of a 
household under the food stamp program. 

"(G)(i) ^ Paragraphs (1)(B), (8), (10), and (19) of section 
11(e) shall apply with respect to the participants in the 
Project in the same manner as such paragraphs apply with 
respect to participants in the food stamp program. 

"(ii) Each individual who contacts the State in person 
during office hours to make what may reasonably be inter- 
preted as an oral or written request to participate in the 
Project shall receive and shall be permitted to file on the 
same day that such contact is first made, an application 
form to participate in the Project. 

"(iii) The Project shall provide for telephone contact by, 
mail delivery of forms to and mail return of forms by, and 
subsequent home or telephone interview with, the elderly 
persons, physically or mentally handicapped, and persons 
otherwise unable, solely because of transportation difficul- 
ties and similar hardships, to appear in person. 

"(iv) An individual who applies to participate in the 
Project may be represented by another person in the review 
process if the other person has been clearly designated as 
the representative of such individual for that purpose, by 
such individual or the spouse of such individual, and, in the 
case of the review process, the representative is an adult 
who is sufficiently aware of relevant circumstances, except 
that the State may — 

"(I) restrict the number of individuals who may be 
represented by such person; and 

"(II) otherwise establish criteria and verification 
standards for representation under this clause. 

"(v) The State shall provide a method for reviewing ap- 
plications to participate in the Project submitted by, and 
distributing food assistance under the Project to, individ- 
uals who do not reside in permanent dwellings or who have 
no fixed mailing address. In carrying out the preceding 
sentence, the State shall take such steps as are necessary to 
ensure that participation in the Project is limited to eligible 
individuals. 

"(3) An assurance that the State will allow any individual to 
apply to participate in the food stamp program without apply- 
ing to participate in the Project. 

"(4) An assurance that the cost of food assistance provided 
under the Project will not be such that the aggregate amount of 
payments made under this section by the Secretary to the State 
over the period of the Project will exceed the sum of — 



' Copy read " '(HXi)". 



101 STAT. 1330-32 



PUBLIC LAW 100-203— DEC. 22, 1987 



"(A) the anticipated aggregate value of the coupons that 
would have been distributed under the food stamp program [ 
if the individuals who participate in the Project had partici- \. 
pated instead in the food stamp program; and 

"(B) the portion of the administrative costs for which the 
State would have received reimbursement under — 

"(i) subsections (a) and (g) of section 16 (without 
regard to the first proviso to such subsection (g)) if the 
individuals who participated in the Project had partici- ? I 
pated instead in the food stamp program; and 

"(ii) section 16(h) if the individuals who participated 
in the Project had participated in an employment and i i 
training program under section 6(d)(4); j l 

except that this paragraph shall not be construed to pre- 
vent the State from claiming payments for additional I I 
households that would qualify for benefits under the food * 1 
stamp program in the absence of a cash out of such benefits 
as a result of changes in economic, demographic, and other \ ' 
conditions in the State or a subsequent change in the ) I 
benefit levels approved by the State legislature. i i 

"(5) An assurance that the State will continue to carry out the | 
food stamp program while the State carries out the Project. I I 

"(6) If there is a change in existing State law that would ! 
eliminate guaranteed benefits or reduce the rights of applicants i 
or participants under this section during, or as a result of j 
participation in, the Project, the Project shall be terminated. | 
"(7) An assurance that the Project shall include procedures | 
and due process guarantees no less beneficial than those which i 
are available under Federal law and under State law to partici- 
pants in the food stamp program. 

"(8)(A) An assurance that, except as provided in subparagraph i 
, (B), the State will carry out the Project during a 5-year period 
beginning on the date the first individual is approved for [ 
participation in the Project. 
Termination "(B) The Project may be terminated 180 days after— 

d^^e. the State gives notice to the Secretary that it intends 

to terminate the Project; or 

"(ii) the Secretary, after notice and an opportunity for a 
hearing, determines that the State materially failed to 
^ comply with this section. 

"(c) Funding. — If an application submitted under subsection (a) by ] 
the State complies with the requirements specified in subsection (b), i 
then the Secretary shall — 1 
"(1) approve such application; and 

"(2) from funds appropriated under this Act, pay the State 
for— 

"(A) the actual cost of the food assistance provided under 
the Project; and 

"(B) the percentage of the administrative costs incurred 
by the State to provide food assistance under the Project 
that is equal to the percentage of the State's aggregate 
administrative costs incurred in operating the food stamp I 
program in the most recent fiscal year for which data are ' " 
available, that was paid under subsections (a), (g), and (h) of 
section 16 of this Act. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-33 



"(d)(1) Project Application.— Unless and until an application to ; 
participate in the Project is approved, and food assistance under the 
Project is made available to the applicant — 

"(A) such application shall also be treated as an application to 
participate in the food stamp program; and 

"(B) section 11(e)(9) shall apply with respect to such 
application. 

"(2) Coupons provided under the food stamp program with respect 
to an individual who — 

"(A) is participating in such program; and 
"(B) applies to participate in the Project; 
may not be reduced or terminated because such individual applies to 
participate in the Project. 

"(3) For purposes of the food stamp program, individuals who 
participate in the Project shall not be considered to be members of a 
household during the period of such participation. 

"(e) Waiver.— The Secretary shall (with respect to the Project) 
waive compliance with any requirement contained in this Act (other 
than this section) that (if applied) would prevent the State from 
carrying out the Project or effectively achieving its purpose. 

"(f) Construction.— For purposes of any other Federal, State or 
local law — 

"(1) cash assistance provided under the Project that rep- 
resents food assistance shall be treated in the same manner as 
coupons provided under the food stamp program are treated; 
and 

® "(2) participants in the program who receive food assistance 
under the Project shall be treated in the same manner as 
recipients of coupons under the food stamp program are treated. 
"(g) Project Audits.— The Comptroller General of the United 
States shall — 

"(1) conduct periodic audits of the operation of the Project to 
verify the amounts payable to the State from time to time under 
subsection (b)(4); and 

"(2) submit to the Secretary of Agriculture, the Secretary of 
Health and Human Services, the Committee on Agriculture of 
the House of Representatives, and the Committee on Agri- 
culture, Nutrition, and Forestry of the Senate a report describ- 
ing the results of each such audit. 
"(h) Evaluation.— With funds appropriated under section 
18(a)(1), the Secretary shall conduct, in consultation with the Sec- 
retary of Health and Human Services, an evaluation of the 
Project.". 

TITLE II— NATIONAL ECONOMIC 
COMMISSION 

SEC. 2101. ESTABLISHMENT OF COMMISSION. 2 USC 901 note. 

There is established a commission to be known as the National 
Economic Commission (in this subtitle referred to as the 
"Commission"). 



Copy had wrong indention for paragraph " '(2)". 



19-139 0 - 88 - 2 (203) 



101 STAT. 1330-34 PUBLIC LAW 100-203— DEC. 22, 1987 



2 use 901 note. SEC. 2102. MEMBERSHIP OF COMMISSION. 

(a) Appointment. — The Commission shall be initially composed of 
12 members, appointed not later than March 1, 1988. After the 
meeting of the Presidential Electors in December 1988, the Commis- ' 
sion shall be expanded to 14 members. The members shall be as 
follows: 

President of U.S. (1) 2 citizens of the United States, appointed by the President. 

(2) 1 Senator and 2 citizens of the United States, appointed by 
the President pro tempore of the Senate upon the recommenda- 
tions of the Majority Leader of the Senate. 

(3) 1 Senator and 1 citizen of the United States, appointed by 
the President pro tempore of the Senate upon the recommenda- 
tion of the Minority Leader of the Senate. 

(4) 1 Member of the House of Representatives and 2 citizens of 
the United States, appointed by the Speaker of the House of 
Representatives. 

(5) 1 Member of the House of Representatives and 1 citizen of 
the United States, appointed by the Minority Leader of the < 
House of Representatives. 

President of U.S. (6) 2 citizens of the United States, 1 of whom is a Democrat 

and 1 of whom is a Republican, appointed by the President-elect 
as established by the allocation of electoral college votes in the |, 
Presidential election of November 8, 1988. ' 

(b) Additional Qualifications.— 

(1) Individuals appointed under subsection (aXD may be offi- 
cers or employees of the Executive Branch or may be private ' 
citizens. 

(2) Individuals who are not Members of the Congress, and are 
appointed under paragraphs (2) through (6) of subsection (a) 
shall be individuals who— ' 

(A) are leaders of business or labor, distinguished aca- 
demics, State or local government officials, or other individ- 
uals with distinctive qualifications or experience; and [ 

(B) are not officers or employees of the United States. 

(c) Chairperson. — The Commission shall elect a Chairperson from 
among the members of the Commission. 

(d) Quorum. — A majority of the members of the Commission shall 
constitute a quorum for the transaction of business. 

(e) Voting. — Each member of the Commission shall be entitled to 
1 vote, which shall be equal to the vote of every other member of the 
Commission. 

(f) Vacancies. — Any vacancy on the Commission shall not affect 
its powers, but shall be filled in the manner in which the original ; 
appointment was made. 

(g) Prohibition of Additional Pay. — Members of the Commission 
shall receive no additional pay, allowances, or benefits by reason of 
their service on the Commission. Members appointed from among 
private citizens of the United States may be allowed travel expenses, 
including per diem, in lieu of subsistence, as authorized by law for 
persons serving intermittently in the government service to the 
extent funds are available for such expenses. 

2 use 901 note. SEC. 2103. FUNCTIONS OF COMMISSION. ^ 

(a) Specific Recommendations. — The Commission shall make spe- 
cific recommendations regarding the following: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-35 

(1) Methods to reduce the Federal budget deficit while promot- 
ing economic growth and encouraging saving and capital 
formation. 

(2) A means of ensuring that the burden of achieving the 
Federal budget deficit reduction goals of the United States does 
not undermine economic growth and is equitably distributed 
and not borne disproportionately by any one economic group, 
social group, region or State. 

(b) Final Report.— 

(1) Subject to section 2103(b)(3), the Commission shall submit 
to the President and to the Congress on March 1, 1989, a final 
report which shall contain a detailed statement of the findings 
and conclusions of the Commission, including its recommenda- 
tions for administrative and legislative action that the Commis- 
sion considers advisable. 

(2) Any recommendation may be made by the Commission to 
the President and to the Congress only if adopted by a majority 
vote of the members of the Commission who are present and 
voting. 

(3) On February 1, 1989, the President may issue an order President of U.S. 
extending the date for submission of the final report to Septem- 
ber 1, 1989. 

SEC. 2104. POWERS OF COMMISSION. 2 USC 901 note. 

(a) Hearings. — The Commission may, for the purpose of carrying 
out this subtitle, hold such hearings and sit and act at such times 
and places, as the Commission may find advisable. 

(b) Rules and Regulations. — The Commission may adopt such 
rules and regulations as may be necessary to establish its procedures 
and to govern the manner of its operations, organization, and 
personnel. 

(c) Assistance From Federal Agencies.— 

(1) The Commission may request from the head of any Federal 
agency or instrumentality such information as the Commission 
may require for the purpose of this subtitle. Each such agency 
or instrumentality shall, to the extent permitted by law and 
subject to the exceptions set forth in section 552 of title 5, 
United States Code (commonly referred to as the Freedom of 
Information Act), furnish such information to the Commission, 
upon request made by the Chairperson of the Commission. 

(2) Upon request of the Chairperson of the Commission, the 
head of any Federal agency or instrumentality shall, to the 
extent possible and subject to the discretion of such head — 

(A) make any of the facilities and services of such agency 
or instrumentality available to the Commission; and 

(B) detail any of the personnel of such agency or 
instrumentality to the Commission, on a non-reimburseable 
basis, to assist the Commission in carrying out its duties 
under this subtitle, except that any expenses of the 
Commission incurred under this subparagraph shall be 
subject to the limitation on total expenses set forth in 
section 2105(b). 

(c) Mails.— The Commission may use the United States mails in 
the same manner and under the same conditions as other Federal 
agencies. 

(d) Contracting. — The Commission may, to such extent and in 
such amounts £is are provided in appropriation Acts, enter into 



101 STAT. 1330-36 PUBLIC LAW 100-203— DEC. 22, 1987 



contracts with State agencies, private firms, institutions, and 
individuals for the purpose of conducting research or surveys nec- 
essary to enable the Commission to discharge its duties under this 
subtitle, subject to the limitation on total expenses set forth in 
section 2105(b). 

(e) Staff. — Subject to such rules and regulations as may be 
adopted by the Commission, the Chairperson of the Commission 
(subject to the limitation on total expenses set forth in section 
2105(b)) shall have the power to appoint, terminate, and fix the 
compensation (without regard to the provisions of title 5, United 
States Code, governing appointments in the competitive service, and 
without regard to the provisions of chapter 51 and subchapter III of 
chapter 53 of such title, or of any other provision, or of any other 
provision of law, relating to the number, classification, and General 
Schedule rates) of an Executive Director, and of such additional staff 
as the Chairperson deems advisable to assist the Commission, at 
rates not to exceed a rate equal to the maximum rate for OS- 18 of 
the General Schedule under section 5332 of such title. 

(f) Advisory Committee. — The Commission shall be considered an 
advisory committee within the meaning of the Federal Advisory 
Committee Act (5 U.S.C. App.). 

2 use 901 note. SEC. 2105. EXPENSES OF COMMISSION. 

(a) In General. — Any expenses of the Commission shall be paid 
from such funds as may be available to the Secretary of the 
Treasury. 

(b) Limitation. — The total expenses of the Commission shall not 
exceed $1,000,000. 

(c) GAO Audit. — Prior to the termination of the Commission, 
pursuant to section 2106, the Comptroller General of the United 
States shall conduct an audit of the financial books and records of 
the Commission to determine that the limitation on expenses has 
been met, and shall include its determination in an opinion to be 
included in the report of the Commission. 

2 use 901 note SEC. 2106. TERMINATION OF COMMISSION. 

The Commission shall cease to exist on the date that is 30 days 
after the date on which the Commission submits its report. 

TITLE III— EDUCATION PROGRAMS 

Subtitle A — Guaranteed Student Loan 
Program Savings 

SEC. 3001. RECOVERY OF EXCESS CASH RESERVES ACCUMULATED 
UNDER THE GUARANTEED STUDENT LOAN PROGRAM. 

(a) In General. — Section 422 of the Higher Education Act of 1965 
(20 U.S.C. 1072) is amended by adding at the end thereof the 
following new subsection: 
"(e) Reduction of Excess Cash Reserves.— 

"(1) Limitation on maximum cash reserves. — A guaranty 
agency shall not accumulate cash reserves in excess of the 
greater of— 

"(A) 40 percent of the total amount paid by that agency 
on insurance claims during the preceding fiscal year; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-37 



"(B) 0.3 percent of original principal amount of loans that 
are insured by that agency and that are outstanding at the 
end of such preceding fiscal year; 

"(C) an amount which, when combined with all other 
parts of total agency reserves, equals 0.4 percent of such 
original principal amount; 

"(D) $500,000; or 

"(E) the amount required to comply with the reserve 
requirements of a State law as in effect on October 17, 1986. 
"(2) Recovery of excess cash reserves. — The Secretary 
shall, not later than March 31, 1988, determine for each guar- 
anty agency the maximum cash reserve permitted under para- 
graph (1) for fiscal year 1986. Subject to paragraphs (3) and (4), if 
the Secretary determines that any guaranty agency had, at the 
end of fiscal year 1986, a cash reserve that exceeded such 
maximum, the Secretary shall direct the agency to eliminate 
such excess by any one or more of the following methods, as 
selected by the guaranty agency: 

"(A) by repaying any advances to such agency made by 
the Secretary under this section that are not required to be 
repaid under subsection (d); 

"(B) by withholding and canceling claims for reimburse- 
ment otherwise payable under section 428(c)(1); 

"(C) by reducing the amount of payments for which ap- 
plication will be made by such agency under section 428(f); 
or 

"(D) by any other method of reducing payments from or 
increasing payments to the Federal Government, including 
payment of additional reinsurance fees in addition to the 
fees required by section 428(cX9), as proposed by the agency 
and agreed to by the Secretary. 
"(3) Appeals based on special circumstances. — (A) If the 
Secretary determines, on the basis of an application from a 
guaranty agency, that — 

"(i) the agency's financial position has deteriorated 
significantly since the end of the preceding fiscal year; 

"(ii) significant changes in the economic circumstances 
(such as a change in agency current cash reserves) or the 
loan insurance program render the limitations of para- 
graph (1) inadequate for the continued functioning of the 
agency; or 

"(iii) in recovering funds as required by this subsection, a 
guaranty agency would be compelled to violate contractual 
obligations existing on the date of enactment of this subsec- 
tion that require a specified level of reserve funds to be 
maintained by such agency; 
the Secretary may waive, in whole or in part, the imposition of 
the remedies required by paragraph (2) for such agency. 

"(B) The Secretary shall respond to request for waivers from 
guaranty agencies in an expedited manner and, except for 
unusual circumstances or with the consent of the guaranty 
agency, shall resolve such request within 6 weeks of submission. 

"(4) Recovery umits.— The Secretary shall not require a total 
reduction of cash reserves for all guaranty agencies in excess of 
$250,000,000 during fiscal year 1988. If the total of cash reserves 
of all guaranty agencies exceeds the maximum amounts per- 
mitted under paragraph (1) by more than $250,000,000, the 



101 STAT. 1330-38 PUBLIC LAW 100-203— DEC. 22, 1987 



Secretary shall ratably reduce the amounts that guaranty agen- 
cies are directed to eliminate under paragraph (2), so that the 
total excess cash reserves to be eliminated equals $250,000,000. 
"(5) Definitions. — As used in this subsection — 

"(A) the 'cash reserves' for any guaranty agency for any 
fiscal year are equal to the agency's cumulative cash re- 
ceipts less the agency's cumulative cash disbursements at 
the end of such fiscal year; 

"(B) the 'total reserves' for any guaranty agency for any 
fiscal year are equal to the agency's cash reserves plus the 
agency's cumulative accounts receivable less the agency's 
accounts payable, as of the end of such fiscal year; 

"(C) the term 'cumulative cash receipts* includes such 
receipts as insurance premiums. Federal reinsurance pay- 
ments, and collections on defaulted loans; 

"(D) the term 'cumulative cash disbursements' includes 
such disbursements as payments for default claims, repay- 
ment of Federal advances, transfers to other State activi- 
ties, and payment of collection costs and other operating 
costs; 

"(E) the term 'accounts receivable' includes Federal re- 
insurance payments and administrative cost allowances 
owed but not yet paid to the guaranty agency, as of the end 
of a fiscal year; and 

"(F) the term 'accounts payable' includes collections and 
reinsurance fees due (but not paid) to the Department of 
Education, as of the end of a fiscal year.", 
(b) Conforming Amendments. — 

(1) The second sentence of section 428(c)(1)(A) of such Act (20 
U.S.C. 1078(c)(1)(A)) is amended by striking out "shall be 
deemed" and inserting "shall, subject to section 422(e), be 
deemed". 

(2) Section 428(c)(9)(A) of such Act is amended by striking out 
"an amount equal to" and inserting "an amount, subject to 
section 422(e), equal to". 

(3) The second sentence of section 428(f)(lXB) of such Act is 
amended by striking out "shall be deemed" and inserting 
"shall, subject to section 422(e), be deemed". 

SEC. 3002. REPEAL. 

(a) In General. — Subsection (e) of section 422 of the Higher 
Education Act of 1965 (20 U.S.C. 1072) is repealed on September 30, 
1989. 

Ot)) Conforming Amendments.— 

(1) Effective September 30, 1989, the second sentence of sec- 
tion 428(c)(1)(A) of such Act (20 U.S.C. 1078(c)(1)(A)) is amended 
by striking out "shall, subject to section 422(e), be deemed" and 
inserting "shall be deemed". 

(2) Effective September 30, 1989, section 428(c)(9)(A) of such 
Act is amended by striking out "an amount, subject to section 
422(e), equal to" and inserting "an amount equal to". 

(3) Effective September 30, 1989, the second sentence of sec- 
tion 428(0(1 KB) of such Act is amended by striking out "shall, 
subject to section 422(e), be deemed" and inserting "shall be 
deemed". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-39 



SEC. 3003. INFORMATION ON DEFAULTS REQUIRED. 

(a) General Rule.— The first sentence of section 428(k){l) of the 
Higher Education Act of 1965 (20 U.S.C. 1078(k)(l)) is amended— 

(1) by striking out "In" and inserting in lieu thereof "Not- 
withstanding any other provision of law, in"; and 

(2) by striking out "may" and inserting in lieu thereof "shall". 

(b) Conforming Amendment.— The second sentence of section 
428(k)(l) of such Act is amended by striking out "may" and inserting 
in lieu thereof "shall". 

Subtitle B— Sale of College Facilities and 
Housing Loans 



SEC. 3101. SALE OF COLLEGE FACILITIES AND HOUSING LOANS. 

Section 783 of the Higher Education Act of 1965 (20 U.S.C. 11321- 
2) is amended by adding at the end thereof the following: "Notwith- 
standing any other provision of this title, after September 30, 1988, 
the Secretary shall not sell any of such obligations. Any agreement 
providing for delaying payment (with respect to obligations sold) 
until after September 30, 1988, or for delaying delivery of such 
obligations or delaying taking other actions in furtherance of such a 
sale until after such date, shall be considered to be a violation of the 
preceding sentence.". 

TITLE IV— MEDICARE, MEDICAID, AND 
OTHER HEALTH-RELATED PROGRAMS 



TABLE OF CONTENTS OF TITLE 



TITLE IV— MEDICARE, MEDICAID, AND OTHER HEALTH-RELATED 
PROGRAMS 

Subtitle A — Medicare 

Part 1 — Relating Only to Part A 

Sec. 400 L Extension of reductions under sequester order. 

Sec. 4002. Basic hospital prospective payment rates. 

Sec. 4003. Increase in disproportionate share adjustment and reduction in indirect 

medical education payments. 

Sec. 4004. Provisions relating to wage index. 

Sec. 4005. Rural hospitals. 

Sec. 4006. Payments for hospital capital. 

Sec. 4007. Reporting hospital information. 

Sec. 4008. Other provisions relating to payment for inpatient hospital services. 

Sec. 4009. Miscellaneous provisions. 

Part 2 — Provisions Relating to Parts A and B 

SUBPART A — HEALTH MAINTENANCE ORGANIZATION REFORMS 

Sec. 4011. Beneficiary protection. 

Sec. 4012. Payments for hospital services. 

Sec. 4013. Two-year extension on j)eriod for benefit stabilization. 

Sec. 4014. Civil money penalties and intermediate sanctions against HMOs/CMPs. 

Sec. 401.5. Medicare payment demonstration projects. 

Sec. 4016. Delay in effective date in physician incentive rules for health mainte- 
nance organizations. 

Sec. 4017. GAO study and reports on medicare capitation. 

Sec. 4018. Special rules. 



101 STAT. 1330-40 



PUBLIC LAW 100-203— DEC. 22, 1987 



SUBPART B— HOME HEALTH QUALITY 

Sec. 4021. Conditions of participation for home health agencies. 
Sec. 4022. Standard and extended survey. 
Sec. 4023. Enforcement. 

Sec. 4024. Requirement that individual be confined to home. 
Sec. 4025. Home health toll-free hotline and investigative unit. 
Sec. 4026. Home health agency cost limits. 

Sec. 4027. Home health prospective payment demonstration project. 

SUBPART C — OTHER PROVISIONS 

Sec. 4031. Payment cycle standards. 

Sec. 4032. Denials and reconsiderations of claims for home health services, 
extended care services, and post-hospital extended care services. 

Sec. 4033. Permitting disabled individuals to renew entitlement to medicare after 
gainful employment without a 2-year waiting period. 

Sec. 4034. Application of secondary payer provisions to governmental entities. 

Sec. 4035. Publication and notification of policies. 

Sec. 4036. End-stage renal disease amendments. 

Sec. 4037. Medicare hearings and appeals. 

Sec. 4038. Rural health medical education demonstration project. 
Sec. 4039. Miscellaneous and technical provisions. 

Part 3 — Relating to Part B 

SUBPART A — provisions RELATING TO PAYMENTS FOR PHYSICIANS* SERVICES 

Sec. 4041. Freeze in payments for physicians' services; extension of sequester order. 
Sec. 4042. General update in payments for physicians' services. 
Sec. 4043. Incentive payments for physicians' services furnished in underserved 
areas. 

Sec. 4044. Adjustment in prevailing charge level for primary care services. 
Sec. 4045. Reduction in prevailing charge level for overpriced procedures. 
Sec. 4046. Limits on payment for ophthalmic ultrasound. 
Sec. 4047. Customary charges for primary care services of new physicians. 
Sec. 4048. Payment for physician anesthesia services. 
Sec. 4049. Fee schedules for radiologist services. 
Sec. 4050. Fee schedules for physician pathology services. 
Sec. 4051. Elimination of markup for certain purchased services. 
Sec. 4052. Collection of past-due amounts owed by physicians who breached con- 
tracts under the National Health Service Corps Scholarship Program. 
® Sec. 4053. Elimination of 1975 floor for prevailing physician charges. 

Sec. 4054. Application of maximum allowable actual charge (MAAC). 
' * Sec. 4055. Applying copayment and deductible to certain outpatient physicians' 
services. 

' 2 Sec. 4056. Physician payment studies. 

SUBPART B— PROVISIONS RELATING TO PAYMENTS FOR OTHER SERVICES 

Sec. 4061. Extension of reduction for other part B items and services payments 

under sequester order. 
Sec. 4062. Payments for durable medical equipment, prosthetic devices, orthotics, 

and prosthetics. 
Sec. 4063. Payment for intraocular lenses. 
Sec. 4064. Clinical diagnostic laboratory tests. 
Sec. 4065. Return on equity payments to outpatient departments. 
Sec. 4066. Payments to hospital outpatient departments for radiology. 
Sec. 4067. Up>dating maximum rate of payment per visit for independent rural 

health clinics. 

Sec. 4068. Payment for ambulatory surgery at eye, and eye and ear, specialty 
hospitals. 

SUBPART C— EUGIBIUTY AND BENEFITS CHANGES 

Sec. 4070. Coverage of mental health services. 
Sec. 4071. Coverage of influenza vaccine and its administration. 
Sec. 4072. Payment for therapeutic shoes for individuals with severe diabetic foot 
disease. 

Sec. 4073. Coverage of certified nurse-midwife services. 



s Copy read "Sec. 4052.". 
'"Copy read "Sec. 4053.". 
• ' Copy read "Sec. 4054.". 
'2 Copy read "Sec. 4055.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-41 



{ Sec. 4074. Coverage of social worker services furnished by a health maintenance or- 
i ganization to its members. 

Sec. 4075. Clarification of coverage of drugs used in immunosuppressive therapy. 

Sec. 4076. Services of a physician assistant. 

Sec. 4077. Psychologist services in clinics. 

Sec. 4078. Provision of offsite comprehensive outpatient rehabilitation services. 
! Sec. 4079. Demonstration projects to provide payment on a prepaid, capitated basis 
for community nursing and ambulatory care furnished to medicare 
' beneficiaries. 

Sec. 4080. Part B premium. 

I SUBPART D — OTHER PROVISIONS 

I Sec. 4081. Submission of claims to supplemental insurance carriers. 

Sec. 4082. Revision of part B hearings. 

Sec. 4083. Provisions relating to Physician Payment Review Commission. 

, Sec. 4084. Technical amendments related to certified registered nurse anesthetists. 

Sec. 4085. Miscellaneous and technical provisions. 

Part 4— Peer Review Organizations 

Sec. 4091. Contract provisions. 

Sec. 4092. Preference in contracting with in-State organizations. 

Sec. 4093. Requiring reasonable notice and opportunity for discussion prior to 
denial of claim. 

Sec. 4094. Peer review norms and education. 

Sec. 4095. Preexclusion hearings, 
j Sec. 4096. Limitation of beneficiary liability for services disallowed by peer review 
I organizations. 
I Sec. 4097. Separate funding levels. 

' Subtitle B— Medicaid 

Part 1 — Eugibiuty and Benefits 

Sec. 4101. Medicaid benefits for poor children and pregnant women. 
Sec. 4102. Home and community-based services for the elderly. 
Sec. 4103. Physicians' services furnished by dentists. 

Sec. 4104. Optional medicaid coverage of individuals in certain States receiving 

only optional State supplementary payments. 
5>ec. 4105. Miscellaneous SSI-related amendments. 

Sec. 4106. Clarification of coverage of clinic services furnished to homeless outside 
. facility. 

I Sec. 4107. Medically needy income levels for certain 2-member couples in 
California.** 

Part 2 — Other Provisions 

j Sec. 4111. Increasing the maximum annual medicaid payments that may be made 
1 to the commonwealths and territories. 

I Sec. 4112. Adjustment in medicaid payment for inpatient hospital services fur- 
' nished by disproportionate share hospitals. 

I Sec. 4113. HMO-related provisions. 

Sec. 4114. Medicaid waiver for hospice care for AIDS patients. 
I Sec. 4115. State demonstration projects. 

I Sec. 4116. Waiver authority under the medicaid program for the Northern Mariana 
Islands. ' ^ 

Sec. 4117. Delay quality control sanctions for medicaid. 
Sec. 4118. Technical and miscellaneous amendments. 



jj Subtitle C— Nursing Home Reform 

Part 1— Medicare Program 

Sec 
Sec 



4201. Requirements for skilled nursing facilities. 

4202. Survey and certification process. 

Sec. 4203. Enforcement process. 

Sec. 4204. Effective dates. 

Sec. 4205. Annual report. 

Sec. 4206. Construction. 



Copy read "reer". 

Copy read "states", and "state", respectively. 
'*Copy read "California ". 

Copy read "northern mariana islands.". 



101 STAT, 1330-42 



PUBLIC LAW 100-203— DEC. 22, 1987 



Part 2— Medicaid Program . 

Sec. 4211. Requirements for nursing facilities. ! 

Sec. 4212. Survey and certification process. I k 

Sec. 4213. Enforcement process. il 

Sec. 4214. Effective dates. ^ 

Sec. 4215. Annual report. ' 

Sec. 4216. Construction. j f 

Sec. 4217. Final regulations with respect to plans of correction or reduction. ^ 

Sec. 4218. Medicaid certifications and recertifications for certain services. ! ^ 

Subtitle D — Vaccine Compensation ^ 

Sec. 4301. Short title, reference. » (j 

Sec. 4302. Effective date. 
Sec. 4303. Compensation. 

Sec. 4304. Petitions. \ 

Sec. 4305. Citizen's actions. 

Sec. 4306. Vaccine'^* administrators. 

Sec. 4307. Court jurisdiction. 

Subtitle E— Rural Health 
Sec. 4401. Office of Rural Health Policy. 

Sec. 4402. Impact analyses of medicare rules and regulations on small rural 
hospitals. i 

Sec. 4403. Set aside for experiments and demonstration projects relating to rural* 
health care issues. 

PART 1— RELATING ONLY TO PART A 

2 use 902 note SEC. 4001. EXTENSION OF REDUCTIONS UNDER SEQUESTER ORDER. 

President of U.S. Notwithstanding any other provision of law (including any other 
provision of this Act), the reductions in the amount of payments, 
required under title XVIII of the Social Security Act made by the j 
final sequester order issued by the President on November 20, 1987, 
pursuant to section 252(b) of the Balanced Budget Emergency Deficit 
Control Act of 1985 shall continue to be effective (as provided by 
sections 252(a)(4)(B) and 256(dX2) of such Act) through— 

(1) March 31, 1988, with respect to payments for inpatient 
hospital services under such title (including payments under i 
section 1886 of such title attributable or allocated to part A of 
such title); and 

(2) December 31, 1987, with respect to pa3Tiients for other 
items and services under part A of such title. 

SEC. 4002. BASIC HOSPITAL PROSPECTIVE PAYMENT RATES. 

(a) Basic Update Factor for PPS Hospitals.— Clause (i) of sec- 
tion 1886(bX3)(B) of the Social Security Act (42 U.S.C. 
1395ww(bX3XB)) is amended by striking "and for fiscal year 1988" in 
subclause (II) and all that follows through the end of such clause and 
inserting after such subclause the following: 

"(III) for fiscal year 1988, 3.0 percent for hospitals located in a 
rural area, 1.5 percent for hospitals located in a large urban 
area (as defined in subsection (dX2XD)), and 1.0 percent for other 
hospitals, 

"(IV) for fiscal year 1989, the market basket percentage in- 
crease minus 1.5 percent for hospitals located in a rural area, 
the market basket percentage increase minus 2.0 percent for 
hospitals located in a large urban area, and the market basket 
percentage increase minus 2.5 percent for other hospitals, and • 

"(V) for fiscal year 1990 and each subsequent fiscal year, the 
market basket percentage for hospitals in all areas.". 



Ck)py read "Vacine". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-43 

(b) Large Urban Area Defined. — The second sentence of section 
1886(dX2XD) of such Act (42 U.S.C. 1395ww(d)(2XD)) is amended 
by inserting after "under subsection (a) by regulation;" the follow- 
ing: "the term 'large urban area' means, with respect to a fiscal 
year, such an urban area which the Secretary determines (in the 
publication described in subsection (eX5XB) before the fiscal year) 
has a population of more than 1,000,000 (as determined by the 
Secretary based on the most recent available population data pub- 
lished by the Bureau of the Census);". 

(c) Adjustment for Hospitals in Large Urban Areas or in 
Rural Areas.— 

(1) In general.— Section 1886(d)(3) of such Act (42 U.S.C. 
1395ww(dX3)) is amended— 

(A) in the matter before subparagraph (A), by striking 
"urban or rural areas" and inserting "large urban, other 
urban, or rural areas"; 

(B) in first sentence of subparagraph (A) — 

(i) by striking "The Secretary" and inserting "(i) For 
discharges occuring in a fiscal year beginning before 
October 1, 1987, the Secretary", 

(ii) by striking "each of fiscal years 1985, 1986, 1987, 
and 1988" and inserting "the fiscal year involved", and 

(iii) by striking ", and adjusted for subsequent fiscal 
years in accordance with the final determination of the 
Secretary under subsection (eX4), and adjusted to re- 
flect the most recent case-mix data available,"; 

(C) by adding at the end of subparagraph (A) the follow- 
ing new clauses: 

"(ii) For discharges occurring in a fiscal year beginning on or 
after October 1, 1987, the Secretary shall compute an average 
standardized amount for hospitals located in a large urban area, 
for hospitals located in a rural area, and for hospitals located in 
urban areas, within the United States and within each region, 
equal to the respective average standardized amount computed 
for the previous fiscal year under this subparagraph increased 
by the applicable percentage increase under subsection 
ObXSXBXi) with respect to hospitals located in the respective 
areas for the fiscal year involved. 

"(iii) Average standardized amounts computed under this 
paragraph shall be adjusted to reflect the most recent case-mix 
data available."; and 

(D) in subparagraph (D) — 

(i) by striking "urban and rural hospitals" in the 
heading and inserting "hospitals in different areas", 

(ii) in clause (i), by inserting "(or, for discharges 
occurring on or after April 1, 1988, in a large urban 
area or other urban area)" after "urban area" the first 
place it appears, and 

(iii) in clause (i), by inserting "such" before "an 
urban area" the second place it appears. 

(2) Conforming amendments.— Section 1886(dX9XA) of such 
Act (42 U.S.C. 1395ww(dX9XA)) is amended— 

(A) in clause (iiXD, by striking "an urban area, and" and 
inserting "a large urban area,"; 



'«'Copy read "(42 U.S.C. 1395www(dM2)(D))". 



101 STAT. 1330-44 PUBLIC LAW 100-203— DEC. 22, 1987 



(B) by redesignating subclause (II) of clause (ii) as 
subclause (III); and 

(C) by inserting after subclause (I) of clause (ii) the follow- 
ing new subclause: 

"(II) such rate for hospitals located in other urban areas, 
and". 

(d) Establishment of Regional Floor. — Section 1886(d)(l)(A)(iii) 
of such Act (42 U.S.C. 1395ww(d)(l)(A)(iii)) is amended by inserting 
before the period at the end the following: **, or, if greater for 
discharges occurring during the period beginning on April 1, 1988, 
and ending on September 30, 1990, the sum of (I) 85 percent of the 
national adjusted DRG prospective payment rate determined under 
paragraph (3) for such discharges, and (II) 15 percent of the regional 
adjusted DRG prospective payment rate determined under such 
paragraph". 

(e) Update for PPS-Exempt Hospitals.— Section 1886(b)(3)(B) of 
such Act (42 U.S.C. 1395ww(b)(3)(B)) is amended— 

(1) in clause (i), by striking * 'subparagraph (A) for 12-month 
cost reporting periods beginning during a fiscal year and for 
purposes of, 

(2) in clause (ii), by striking "(ii) For purposes of clause (i)" 
and inserting "(iii) For purposes of this subparagraph", and 

(3) by inserting after clause (i) the following new clause: 
"(ii) For purposes of subparagraph (A), the 'applicable percentage 

increase' for 12-month cost reporting periods beginning during — 
"(I) fiscal year 1986, is 0.5 percent, 
"(II) fiscal year 1987, is 1.15 percent, 

"(III) fiscal year 1988, is the market basket percentage in- I 
crease minus 2.0 percentage points, and 1 

"(IV) subsequent fiscal years is the market basket percentage 
increase.". 

(f) Related Conforming and Technical Amendments. — 

(1) Section 1886 of such Act (42 U.S.C. 1395ww) is further 
amended — 

(A) by adding at the end of subsection (d)(2)(D) the follow- 
ing new sentence: "For purposes of payment under this 
subsection, a hospital is considered to be located in an 
urban area or large urban area, respectively, if the hospital 
is paid under this subsection at the rate for hospitals 
located in such an area."; 

(B) in subsection (e)(3)(B), by striking "or determine"; 

(C) in subsection (e)(4) — 

(i) by striking "for fiscal year 1988" and inserting 
"for each fiscal year (beginning with fiscal year 1988)", 

(ii) by striking "and shall determine for each subse- 
quent fiscal year" and all that follows through "fiscal 
year, and", and 

(iii) by amending the last sentence to read as follows: 
"The appropriate change factor may be different for all 
large urban subsection (d) hospitals, other urban 
subsection (d) hospitals, urban subsection (d) Puerto 
Rico hospitals, rural subsection (d) hospitals, and rural 
subsection (d) Puerto Rico hospitals, and all other hos- 
pitals and units not paid under subsection (d), and may 
vary among such other hospitals and units."; and 

(D) in paragraph (5), by striking "or determination" each 
place it appears. 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-45 



(2) Subsection (a)(l)(B)(ii) of section 107 of the Balanced 
Budget and Emergency Deficit Control Reaffirmation Act of 
1987 (Public Law 100-119) is amended, effective as of the date of 42 USC I395ww 
the enactment of such Act, by inserting the target percentage note, 
and DRG percentage shall be those specified in subsection 
(d)(l)(C)(iv) of such section, and the applicable percentage in- 
crease in a hospital's target amount shall be deemed to be 0 
percent" before the period at the end. 
(g) Effective Dates.— 42 use I395ww 

(1) PPS HOSPITALS, DRG PORTION OF PAYMENT.— In the Case of a note. 

subsection (d) hospital (as defined in paragraph (6)) — 

(A) the amendments made by subsections (a) and (c) shall 
apply to payments made under section 1886(a)(l)(A)(iii) of 
the Social Security Act on the basis of discharges occurring 
on or after April 1, 1988, and 

(B) for discharges occurring on or after October 1, 1988, 
the applicable percentage increase (described in section 
1886(d)(3)(B) of such Act) for discharges occurring during 
fiscal year 1987 is deemed to have been such percentage 
increase as amended by subsection (a). 

(2) PPS SOLE COMMUNITY HOSPITALS, HOSPITAL SPECIFIC PORTION 

OF PAYMENT. — In the case of a subsection (d) hospital which 
receives payments made under section 1886(d)(1)(A) of the Social 
Security Act because it is a sole community hospital — 

(A) the amendment made by subsections (a) and (c) shall 
apply to payments under section 1886(d)(l)(A)(ii)(I) of the 
Social Security Act made on the basis of discharges occur- 
ring during a cost reporting period of a hospital, for the 
hospital's cost reporting period beginning on or after Octo- 
ber 1, 1987; 

(B) notwithstanding subparagraph (A), for cost reporting 
period beginning during fiscal year 1988, the applicable 
percentage increase (as defined in section 1886(d)(3)(B) of 
such Act) for the — 

(i) first 51 days of the cost reporting period shall be 0 
percent, 

(ii) next 132 days of such period shall be 2.7 percent, 
and 

(iii) remainder of such period of the cost reporting 
period shall be the applicable percentage increase (as so 
defined, as amended by subsection (a)); and 

(C) for cost reporting periods beginning on or after Octo- 
ber 1, 1988, the applicable percentage increase (as so de- 
fined) with respect to the previous cost reporting period 
shall be deemed to have been the applicable percentage 
increase (as so defined, as amended by subsection (a)). 

(3) PPS-EXEMPT HOSPITALS.— In the case of a hospital that is 
not a subsection (d) hospital — 

(A) the amendments made by subsection (e) shall apply to 
cost reporting periods beginning on or after October 1, 1987 ; 

(B) notwithstanding subparagraph (A), for the hospital's 
cost reporting period beginning during fiscal year 1988, 
payment under title XVIII of the Social Security Act shall 
be made as though the applicable percentage increase de- 



" Copy read "Act))". 



101 STAT. 1330-46 PUBLIC LAW 100-203— DEC. 22, 1987 



scribed in section 1886(b)(3)(B) of such Act were equal to the 
product of 2.7 percent and the ratio of 315 to 366; and 
(C) for cost reporting periods beginning on or after Octo- 
ber 1, 1988, the applicable percentage increase (as so de- 
fined) with respect to the cost reporting period beginning 
during fiscal year 1988 shall be deemed to have been 2.7 , 
percent. > 

Effective date. (4) DEFINITION, REGIONAL FLOOR, AND TECHNICAL AND j 

CONFORMING AMENDMENTS. — The amendments made by subsec-[ 
tions (b) and (d) and paragraphs (1) and (2) of subsection (0 shall |' 
take effect on the date of the enactment of this Act. ii 

(5) Transition for large urban area rates. — In computing 
the average standardized amount for hospitals located in a large ) 
urban area or other urban area under section 1886(d)(3)(A)(ii) of ^ 
the Social Security Act (as amended by subsection (c)) for fiscal [ 
year 1988, the reference to "the respective average standardized 
amount computed for the previous fiscal year under this 
subparagraph" is deemed a reference to the average standard-^ 
ized amount computed for hospitals located in an urban area for ' 
the 51-day period beginning on October 1, 1987. ' 

(6) Definition. — In this subsection, the term "subsection (d) ' 
hospital" has the meaning given such term in section ^ 
1886(d)(10)(B) of the Social Security Act. 

SEC. 4003. INCREASE IN DISPROPORTIONATE SHARE ADJUSTMENT AND i 
REDUCTION IN INDIRECT MEDICAL EDUCATION PAYMENTS. i 

(a) Reduction in Indirect Medical Education Payments.— 

(1) Section 1886(d)(5)(B)(ii) of the Social Security Act (42 U.S.C. ' 
1395ww(d)(5)(B)(ii)) is amended— 

(A) in subclause (I), by striking "2" and inserting in lieu '! 
thereof "1.89"; and s 

(B) in subclause (II), by striking "1.5" and inserting in « 
lieu thereof "1.43". 

(2) Section 1886(d)(3)(C)(ii) of such Act (42 U.S.C. 
1395ww(d)(3)(C)(ii)) is amended by inserting "and by section s 
4003(a)(1) of the Omnibus Budget Reconciliation Act of 1987" 
after "1985" each place it appears in subclauses (I) and (II). . 

(b) Increase In Disproportionate Share Adjustment. — Section 
1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(B))— 

(1) in clause (iii), by striking "15 percent" and inserting "25 I 
percent", and 

(2) in clause (iv)(I), by striking "the lesser of 15 percent, or". 

(c) Extension of Disproportionate Skare Adjustment. — Sec- 
tions 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)), 1886(d)(3)(C)(ii)(I) 
(42 U.S.C. 1395ww(d)(3)(C)(ii)(I)), 1886(d)(3)(C)(ii)(II) (42 U.S.C. 
1395ww(d)(3)(CXii)(II)), 1886(d)(5)(B)(ii)(I) (42 U.S.C. 
1395ww(dX5)(B)(ii)(I)), 1886(d)(5)(B)(iiXII) (42 U.S.C. 
1395ww(dX5XBXiiXII)), and 1886(dX5XFXi) (42 U.S.C. 
1395ww(dX5XFXi)) of the Social Security Act are each amended by 
striking "1989" and inserting in lieu thereof "1990". 

(d) Special Rule.— In the case of a hospital which— )> 

(1) consists of 2 inpatient hospital facilities which are more ^ 
* than 4 miles apart and each of which is in a separate political 

jurisdiction within the same State and one of which meets the 
criteria under section 1886(dX5XF) of the Social Security Act for 
serving a significantly disproportionate number of low-income 
patients as if that facility were a separate hospital; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-47 

(2) receives payments for inpatient hospital services under 
title XVIII of the Social Security Act which are less than the 
hospital's reasonable costs, 
the Secretary of Health and Human Services, upon application by 
the hospital, may treat each of the facilities of hospital as separate 
; hospitals for purposes of applying section 1886(dX5)(F) of the Social 
Security Act, for discharges occurring on or after October 1, 1988. 
I (e) Effective Date. — The amendments made by this section shall 42 USC I395ww 
apply to payments for discharges occurring on or after October 1, ^^^^^ 
1988. 

SEC. 4004. PROVISIONS RELATING TO WAGE INDEX. 

(a) Survey.— Section 1886(dX3)(E) of the Social Security Act (42 
, U.S.C. 1395ww(d)(3XE)) is amended by adding at the end the follow- 
' ing: "Not later than October 1, 1990 (and at least every 36 months 

thereafter), the Secretary shall update the factor under the preced- 
! ing sentence on the basis of a survey conducted by the Secretary 

(and updated as appropriate) of the wages and wage-related costs of 
, subsection (d) hospitals in the United States. To the extent deter- 
'j mined feasible by the Secretary, such survey shall measure the 
, earnings and paid hours of employment by occupational category 

and shall exclude data with respect to the wages and wage-related 
j costs incurred in furnishing skilled nursing facility services.", 
j (b) Clinic Hospital Wage Indices. — In calculating the wage index 
^ under section 1886(d) of the Social Security Act for purposes of 
i| making payment pdjustments after September 30, 1988, as required 

I under paragraphs (2XH) and (3XE) of such section, in the case of any 
institution which received the waiver specified in section 602(k) of 
the Social Security Amendments of 1983, the Secretary of Health 
and Human Services shall include wage costs paid to related 
organization employees directly involved in the delivery and 
administration of care provided by the related organization to hos- 
pital inpatients. For purposes of the preceding sentence, the term 
"wage costs" does not include costs of overhead or home office 
administrative salaries or any costs that are not incurred in the 

I, hospital's Metropolitan Statistical Area. 

I I SEC. 4005. RURAL HOSPITALS. 

(a) Revision of Standards for Including a Rural County in an 
Urban Area. — 

(1) Treating certain rural hospitals adjacent to urban 
AREAS as urban HOSPITALS. — Section 1886(dX8) of the Social 
• \ Security Act (42 U.S.C. 1395ww(dX8))— 

(A) by redesignating clauses (i) and (ii) of subparagraphs 
(A) and (B) £is subclauses (I) and (II), respectively, 

(B) by redesignating subparagraphs (A) and (B) as clauses 
(i) and (ii), respectively, 

(C) by inserting "(A)" after "(8)", and 

(D) by adding at the end the following new subparagraph: 

11 "(B) The Secretary shall treat a hospital located in a rural county 
adjacent to one or more urban areas as being located in the urban 
^ metropolitan statistical area to which the greatest number of 
il workers in the county commute, if— 

e I "(i) the rural county would otherwise be considered part of an 

f urban area but for the fact that the rural county does not meet 
« ! the standard relating to the rate of commutation between the 



42 USC 1395WW 
note. 



101 STAT. 1330-48 PUBLIC LAW 100-203— DEC. 22, 1987 



rural county and the central county or counties of any adjacent 
urban area; and 

"(ii) either (I) the number of residents of the rural county who 
commute for employment to the central county or counties of 
any adjacent urban area is equal to at least 15 percent of the 
number of residents of the rural county who are employed, or 
(II) the sum of the number of residents of the rural county who 
.t^ . ; . ; commute for employment to the central county or counties of 
any adjacent urban area and the number of residents of any 
adjacent urban area who commute for employment to the rural 
county is at least equal to 20 percent of the number of residents 
of the rural county who are employed. 
"(C) The Secretary shall make a proportional adjustment in the 
standardized amount determined under paragraph (3) for hospitals 
located in an urban area to assure that the provisions of subpara- 
graph (B) do not result in aggregate payments under this section 
that are greater or less than those that would otherwise be made. 
The Secretary shall make such adjustment in payments under this 
section to hospitals located in rural areas as are necessary to assure 
that the aggregate of payments to rural hospitals not affected by 
subparagraph (B) are not changed as a result of the application of 
subparagraph (B).". 

(2) Location of hospital.— For purposes of section 1886 of the 
Social Security Act, Watertown Memorial Hospital in Water- 
town, Wisconsin is deemed to be located in Jefferson County, 
Wisconsin. 

42 use I395ww (3) EFFECTIVE DATE.— This section, and the amendments made 

^0^^ by paragraph (1), shall apply to discharges occurring on or after 

October 1, 1988. 
(b) Expansion of Swing-Bed Program. — 

(1) Expansion to hospitals with fewer than lOO beds. — 
Section 1883(b)(1) of the Social Security Act (42 U.S.C. 
1395tt(b)(l)) is amended by striking "50 beds" and inserting "100 
beds". 

(2) Requirements for hospitals with more than 49 beds. — 
42 use I395tt. Section 1883(d) of such Act (42 U.S.C. 1395dd(d)) is amended— 

(A) by inserting "(1)" after "(d)", and 

(B) by adding at the end the following new paragraphs: 
'*(2)(A) Any agreement under this section with a hospital with 

more than 49 beds shall provide that no payment may be made for 
extended care services which are furnished to an extended care 
patient after the end of the 5-day period (excluding weekends and 
holidays) beginning on an availability date for a skilled nursing 
facility, unless the patient's physician certifies, within such 5-day 
period, that the transfer of that patient to that facility is not 
Regulations. medically appropriate on the availability date. The Secretary shall 
prescribe regulations to provide for notice by skilled nursing facili- 
ties of availability dates to hospitals which have agreements under 
this section and which are located within the same geographic 
region (as defined by the Secretary). 
"(B) In this paragraph: 
* **(i) The term 'availability date' means, with respect to an 

extended care patient at a hospital, any date on which a bed is 
available for the patient in a skilled nursing facility located , 
within the geographic region in which the hospital is located. 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-49 



"(ii) The term 'extended care patient' means an individual 
being furnished extended care services at a hospital pursuant to 
an agreement with the Secretary under this section. 
"(3) In the case of an agreement for a cost reporting period under 
this section with a hospital that has more than 49 beds, payment 
may not be made in the period for patient-days of extended care 
services that exceed 15 percent of the product of the number of days 
in the period and the average number of licensed beds in the 
hospital in the period.". 

(3) Report. — The Secretary of Health and Human Services 
shall report to Congress, not later than February 1, 1989, 
concerning — 

(A) the proportion of admissions to hospitals for extended 
care services under section 1883 of the Social Security Act 
which are denied or approved by a peer review organization 
under section 1154(a)(1) of such Act, and 

(B) on recommendations for methods of encouraging hos- 
pitals that — 

(i) have a low occupancy rate, 

(ii) are eligible to enter (but have not entered) into an 
agreement under section 1883 of such Act, and 

(iii) are located in areas with a need for additional 
providers of extended care services, 

to enter into such agreements. 

(4) Effective date. — The amendments made by paragraphs 
(1) and (2) shall apply to agreements under section 1883 of the 
Social Security Act entered into after March 31, 1988. 

(c) Payments to Sole Community Hospitals. — 

(1) Section 1886(d)(5)(C)(ii) of the Social Security Act (42 U.S.C. 
1395ww(d)(5XC)(ii)) is amended— 

(A) by striking "1988" in the second sentence and insert- 
ing "1990", and 

(B) by inserting after the second sentence the following: 
"A subsection (d) hospital that meets the criteria for clas- 
sification as a sole community hospital and otherwise 
qualifies for the adjustment authorized by the preceding 
sentence may qualify for such an adjustment without 
regard to the formula by which payments are determined 
for the hospital under paragraph (1)(A).". 

(2) (A) The amendments made by paragraph (1) shall apply to 
cost reporting periods beginning on or after October 1, 1987 

(B) The Secretary of Health and Human Services shall take 
appropriate steps to ensure that the total amount paid in a 
fiscal year under title XVIII of the Social Security Act by reason 
of the amendment made by paragraph (IXB) does not exceed 
$5,000,000 in the case of fiscal year 1988 and $10,000,000 for 
fiscal year 1989. 

(d) Medicare Classification of Rural Referral Centers.— 

(1) Extension of classification.— 

(A) In general. — The first sentence of section 
1886(dX5XC)(iXI) of the Social Security Act (42 U.S.C. 
1395ww(dX5XCXi)(I)) is amended by striking "500" and 
inserting "275". 

(B) Effective date. — The amendment made by subpara- 
graph (A) shall apply to discharges occurring on or after 
April 1, 1988. 

(2) Study.— 



42 use 1395tt 
note. 



42 use 1395tt 
note. 



42 use 1395ww 
note. 



42 use 1395WW 
note. 

42 use 1395WW 
note. 



101 STAT. 1330-50 PUBLIC LAW 100-203— DEC. 22, 1987 



(A) In general.— The Secretary of Health and Human 
Services shall provide for a study of the criteria used for the 
classification of hospitals as rural referral centers under 
section 1886(d)(5XCXi) of the Social Security Act. The study 
shall include an examination of— 

(i) the extent that hospitals classified as rural refer- 
ral centers receive more or less than their actual costs 
of providing inpatient hospital services, and 

(ii) the appropriateness of providing for payment for 
such centers at a rate other than the rate for a hospital 
located in an other urban area. 

(B) Report. — The Secretary shall report to Congress, by 
not later than March 1, 1989, on the study conducted under 
subparagraph (A) and on recommendations for the criteria 
that should be applied under section 1886(d)(5XCXi) of the 
Social Security Act for the classification of hospitals as 
rural referral centers for cost reporting periods beginning 
on or after October 1, 1989. 

42 use 1395WW (e) GrANT PROGRAM FOR RURAL HEALTH CaRE TRANSITION.— 

note. (1) The Administrator of the Health Care Financing Adminis- 

tration, in consultation with the Assistant Secretary for Health 
(or a designee), shall establish a program of grants to assist 
eligible small rural hospitals and their communities in the 
planning and implementation of projects to modify the type and 
extent of services such hospitals provide in order to adjust for 
one or more of the following factors: 

(A) Changes in clinical practice patterns. 

(B) Changes in service populations. 

(C) Declining demand for acute-care inpatient hospital 
capacity. 

(D) Declining ability to provide appropriate staffing for 
inpatient hospitals. 

(E) Increasing demand for ambulatory and emergency 
services. 

(F) Increasing demand for appropriate integration of 
community health services. 

(G) The need for adequate access (including appropriate 
transportation) to emergency care and inpatient care in 
areas in which a significant number of underutilized hos- 
pital beds are being eliminated. 

(H) The Administrator shall submit a final report on the 
program to the Congress not later than 180 days after all 
projects receiving a grant under the program are 
completed. 

Each demonstration project under this subsection shall dem- 
onstrate methods of strengthening the financial and managerial 
capability of the hospital involved to provide necessary services. 
Such methods may include programs of cooperation with other 
health care providers, of diversification in services furnished 
(including the provision of home health services), of physician 
recruitment, and of improved management systems. 

(2) For purposes of this subsection, the term "eligible small 
rural hospital" means any non-Federal, short-term general 
acute care hospital that— 



Copy read " 'eligible small rural hospital' 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-51 



(A) is located in a rural area (as determined in accordance 
with subsection (d)), 

(B) has less than 100 beds, and 

(C) is not for profit. 

(3) (A) Any eligible small rural hospital that desires to modify 
the type or extent of health care services that it provides in 
order to adjust for one or more of the factors specified in 
paragraph (1) may submit an application to the Governor of the 
State in which it is located. The application shall specify the 
nature of the project proposed by the hospital, the data and 
information on which the project is based, and a timetable (of 
not more than 24 months) for completion of the project. The 
application shall be submitted on or before a date specified by 
the Administrator and shall be in such form as the Adminis- 
trator may require. 

(B) The Governor shall transmit any application submitted 
pursuant to subparagraph (A) to the Secretary not later than 30 
days after it is received by the Governor, accompanied by any 
comments with respect to the application that the Governor 
deems appropriate. 

(C) The Governor of a State may designate an appropriate 
State agency to receive and comment on applications submitted 
under subparagraph (A). 

(4) A hospital shall be considered to be located in a rural area 
for purposes of this subsection if it is treated as being located in 
a rural area for purposes of section 1886(d)(3)(D) of the Social 
Security Act. 

(5) In determining which hospitals making application under 
paragraph (3) will receive grants under this subsection, the 
Administrator shall take into account — 

(A) any comments received under paragraph (3)(B) with 
respect to a proposed project; 

(B) the effect that the project will have on — 

(i) reducing expenditures from the Federal Hospital 
Insurance Trust Fund, 

(ii) improving the access of medicare beneficiaries to 
health care of a reasonable quality; 

(C) the extent to which the proposal of the hospital, using 
appropriate data, demonstrates an understanding of— 

(i) the primary market or service area of the hospital, 
and 

(ii) the health care needs of the elderly and disabled 
that are not currently being met by providers in such 
market or area, and 

(D) the degree of coordination that may be expected 
between the proposed project and — 

(i) other local or regional health care providers, and 

(ii) community and government leaders, 

as evidenced by the availability of support for the project (in 
cash or in kind) and other relevant factors. 

(6) A grant to a hospital under this subsection may not exceed 
$50,000 a year and may not exceed a term of 2 years. 

(7XA) Except as provided in subparagraphs (D) and (C), a 
hospital receiving a grant under this subsection may use the 
grant for any of expenses incurred in planning and implement- 
ing the project with respect to which the grant is made. 



101 STAT. 1330-52 PUBLIC LAW 100-203— DEC. 22, 1987 

(B) A hospital receiving a grant under this subsection for a 
project may not use the grant to retire debt incurred with 
respect to any capital expenditure made prior to the date on 
which the project is initiated. 

(C) Not more than one-third of any grant made under this 
subsection may be expended for capital-related costs (as defined 
by the Secretary for purposes of section 1886(aX4) of the Social 
Security Act) of the project. 

(8) (A) A hospital receiving a grant under this section shall 
furnish the Administrator with such information as the 
Administrator may require to evaluate the project with respect 
to which the grant is made and to ensure that the grant is 
expended for the purposes for which it was made. 

(B) The Administrator shall report to the Congress at least 
once every 6 months on the program of grants established under 
this subsection. The report shall assess the functioning and 
status of the program, shall evaluate the progress made toward 
achieving the purposes of the program, and shall include any 
recommendations the Secretary may deem appropriate with 
respect to the program. In preparing the report, the Secretary 
shall solicit and include the comments and recommendations of 
private and public entities with an interest in rural health care. 

(C) The Administrator shall submit a final report on the 
program to the Congress not later than 180 days after all 
projects receiving a grant under the program are completed. 

(9) For purposes of carrying out the program of grants under 
this subsection, there are authorized to be appropriated from 
the Federal Hospital Insurance Trust Fund $15,000,000 for each 
of the fiscal years 1989 and 1990. 

SEC. 4006. PAYMENTS FOR HOSPITAL CAPITAL. 

(a) Reductions in Payments for Capital. — Section 1886(g)(3XA) 
of the Social Security Act (42 U.S.C. 1395ww(g)(3)(A)) is amended— 

(A) in clause (ii), by striking **, and" and inserting "on or 
after October 1, 1987, and before January 1, 1988,", 

(B) by striking clause (iii) and inserting the following: 
"(iii) 12 percent for payments attributable to portions of cost 

reporting periods or discharges (as the case may be) in fiscal 
year 1988, occurring on or after January 1, 1988, and 

"(iv) 15 percent to portions of cost reporting periods or dis- 
charges (as the case may) be occurring during fiscal year 1989.". 

(b) Prospective Payment for Capital-Related Costs.— 
(1) In general. — Paragraph (1) of section 1886(g) of such Act 

(42 U.S.C. 1395ww(g)) is amended to read as follows: 
"(g)(1)(A) Notwithstanding section 1861(v), instead of any amounts 
that are otherwise payable under this title with respect to the 
reasonable costs of subsection (d) hospitals and subsection (d) Puerto 
Rico hospitals for capital-related costs of inpatient hospital services, 
the Secretary shall, for hospital cost reporting periods beginning on 
or after October 1, 1991, provide for payments for such costs in 
accordance with a prospective payment system established by the 
Secretary. 

"(B) Such system— 

"(i) shall provide for (I) a payment on a per discharge basis, 
and (II) an appropriate weighting of such payment amount as 
relates to the classification of the discharge; 



Reports. 



Reports. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-53 



"(ii) may provide for an adjustment to take into account 
variations in the relative costs of capital and construction for 
the different types of facilities or areas in which they are 
located; 

"(iii) may provide for such exceptions (including appropriate 
exceptions to reflect capital obligations) as the Secretary deter- 
mines to be appropriate, and 

"(iv) may provide for suitable adjustm.ent to reflect hospital 
occupancy rate. 

"(C) In this paragraph, the term 'capital-related costs' has the 
meaning given such term by the Secretary under subsection (a)(4) as 
of September 30, 1987, and does not include a return on equity 
capital.". 

(2) Conforming amendment.— Section 1886 of such Act is 42 use I395ww. 
amended — 

(A) in subsection (a)(4), by striking "with respect to costs 
incurred in cost reporting periods beginning prior to Octo- 
ber 1 of 1987 (or of such later year as the Secretary may, in 
his discretion, select), other capital-related costs, as defined 
by the Secretary" and inserting "other capital-related costs 
(as defined by the Secretary for periods before October 1, 
1987)", and 

(B) by striking subparagraph (C) of subsection (g)(3). 

(3) Effective dates.— The amendment made by paragraph (1) 42 USC I395ww 
shall take effect on October 1, 1987. The amendments made by note, 
paragraph (2) shall apply to cost reporting periods beginning on 

or after October 1, 1987. 
(c) ProPAC Report on Adjustment for Hospital Occupancy. — 
The Prospective Payment Assessment Commission shall study and 
report to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate, by not 
later than May 1, 1988, on the suitability and feasibility of linking 
payment for capital-related costs under part A of title XVIII of the 
Social Security Act to hospital occupancy rates. 

SEC. 4007. REPORTING HOSPITAL INFORMATION. 42 USC 1395ww 

(a) Development of Data Base.— The Secretary of Health and ^^^^ 
Human Services (in this section referred to as the "Secretary") 
shall develop and place into effect not later than June 1, 1989, a 
data base of the operating costs of inpatient hospital services with 
respect to all hospitals under title XVIII of the Social Security Act, 
I which data base shall be updated at least once every quarter (and 
f maintained for the 12-month period preceding any such update). The 
data base under this subsection may include data from preliminary 
cost reports (but the Secretary shall make available an updata 
analysis of the differences between preliminary and settled cost 
reports). 

j (b) Reporting of Information Electronically.— 
jj (1) Subject to paragraph (2), with respect to hospital cost 

i reporting periods beginning on or after October 1, 1989, the 

Secretary shall place into effect a standardized electronic cost 
I reporting format for hospitals under the medicare program. 

(2) The Secretary may delay or waive the implementation of 
! such format in particular instances where such implementation 



Copy read "Services, (in". 
2° Copy read "Electronically — Subject" 



101 STAT. 1330-54 PUBLIC LAW 100-203— DEC. 22, 1987 



would result in financial hardship (in particular with respect to 
a small percentage of medicare volume), 
(c) Demonstration Project.— 

(1) The Secretary of Health and Human Services shall provide i 
for a 3-year demonstration project to develop, and determine 
the costs and benefits of establishing a uniform system for the 
reporting by medicare participating hospitals of balance sheet I 

Contracts. and information described in paragraph (2). In contracting the 

project, the Secretary shall require hospitals in at least 2 States, 
one of which maintains a uniform hospital reporting system, to ii 
report such information based on standard information estab- 
lished by the Secretary. I 

(2) The information described in this paragraph is as follows: 

(A) Hospital discharges (classified by category of service 
and by class of primary payer). 

(B) Patient days (classified by category of service and by \ 
class of primary payer). 

(C) Licensed beds, staffed beds, and occupancy (by cat- 
egory of service). | 

(D) Outpatient visits (classified by class of primary payer). 

(E) Inpatient charges and revenues (classified by class of 
primary payer). 

(F) Outpatient charges and revenues (classified by class of 
primary payer). 

(G) Inpatient and outpatient hospital expenses (by cost- 
center classified for operating and capital). 

(H) Reasonable costs. 

(I) Other income. 

(J) Uncompensated care (classified by bad debt and char- 
ity care). 
(K) Capital acquisitions. 
(L) Capital assets. 

(3) The Secretary shall develop the system under subsection 
(c) in a manner so as — 

(A) to facilitate the submittal of the information in the 
report in an electronic form, and 

(B) to be compatible with the needs of the medicare 
prospective payment system. 

(4) The Secretary shall prepare and submit, to the Prospective 
Payment Assessment Commission, the Comptroller General, the 
Committee on Ways and Means of the House of Representa- 
tives, and the Committee on Finance of the Senate, by not later 
than 45 days after the end of each calendar quarter, data 
collected under the system. 

(5) In paragraph (3): 

(A) The terms "bad debt" and "charity care" have such 
meanings as the Secretary establishes. 

(B) The term "class" means, with respect to payers, the 
programs under this title VIII of the Social Security Act, a 
State plan approved under title XIX of such Act, other 
third party-payers, and self-paying individuals. 

(6) 2 1 The Secretary shall set aside at least $1,000,000 for each 
of fiscal years 1988, 1989, and 1990 from existing research funds 



Copy read "(7)" 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-55 



to develop the format, according to paragraph (1), and at least 
$2,000,000 from program operations funds for data collection 
and analysis, but total funds shall not exceed $15,000,000 over 3 
years. 

(7) 2 2 The Comptroller General shall analyze the adequacy of 
the existing system for reporting of hospital information and 
the costs and benefits of data reporting under the demonstra- 
tion system and will recommend improvements in hospital data 
collection and in analysis and display of data in support of 
policy making. 

2^ (d) Consultation. — The Secretary shall consult representatives 
of the hospital industry in carrying out the provisions of this section. 

SEC. 4008. OTHER PROVISIONS RELATING TO PAYMENT FOR INPATIENT 
HOSPITAL SERVICES. 

(a) Massachusetts Medicare Repayment.— The Secretary of 
Health and Human Services shall not, on or after the date of the 
enactment of this Act, and before January 1, 1989, recoup from, or 
otherwise reduce payments to, hospitals in the State of Massachu- 
setts because of alleged overpayments to such hospitals under part 
A of title XVIII of the Social Security Act which occurred during the 
period of the statewide hospital reimbursement demonstration 
project conducted in that State, between October 1, 1982, and June 
30, 1986, under section 402 of the Social Security Amendments of 
1967 and section 222 of the Social Security Amendments of 1972. 

(b) Clarification of Section 18140^) State Waiver Authority. — 

(1) Appucation of aggregate test. — Section 18140t>)(3)(B) of 
the Social Security Act (42 U.S.C. 1395f(b)(3)(B)) is amended b^ 
striking "rate of increase for the previous three-year period ' 
and inserting "aggregate rate of increase from October 1, 1983, 
to the most recent date for which annual data are available". 

(2) Effective date. — The amendment made by paragraph (1) 
shall take effect on the date of the enactment of this Act. 

(c) Continuation of Bad Debt Recognition for Hospital Serv- 
ices. — In making payments to hospitals under title XVIII of the 
Social Security Act, the Secretary of Health and Human Services 
shall not make any change in the policy in effect on August 1, 1987, 
with respect to payment under title XVIII of the Social Security Act 
to providers of service for reaisonable costs relating to unrecovered 
costs associated with unpaid deductible and coinsurance amounts 
incurred under such title (including criteria for what constitutes a 
reasonable collection effort). 

(d) Hospital Outuer Payments and Poucy.— 

(1) Increase in outuer payments for burn center drgs. — 

(A) In general. — For discharges classified in diagnosis- 
related groups relating to burn cases and occurring on or 
after April 1, 1988, and before October 1, 1989, the marginal 
cost of care permitted by the Secretary of Health and 
Human Services under section 1886(d)(5)(A)(iii) of the Social 
Security Act shall be 90 percent of the appropriate per diem 
cost of care or 90 percent of the cost for cost outliers. 

(B) Budget neutrauty. — Subparagraph (A) shall be im- 
plemented in a manner that ensures that total payments 
under section 1886 of the Social Security Act are not in- 



42 use 1395f 
note. 

42 use 1395f 
note. 



42 use 1395WW 
note. 



" Copv read "(8)". 

23 "(jj) • Paragraph had wrong indention. 



101 STAT. 1330-56 PUBLIC LAW 100-203— DEC. 22, 1987 



creased or decreased by reason of the adjustments required 
by such subparagraph. 

(2) Limitation on changes in outlier regulations — 

(A) In general. — Notwithstanding any other provision of 
law, except as required to implement specific provisions 
required under statute, the Secretary of Health and Human 
Services is not authorized to issue in final form, after the 
date of the enactment of this Act and before September 1, 
1988, any final regulation which changes the method of 
payment for outlier cases under section 1886(d)(5XA) of the 
Social Security Act. 

(B) Propac 2* report. — The chairman of the Prospective 
Payment Assessment Commission shall report to the Con- 
gress and the Secretary of Health and Human Services, by 
not later than June 1, 1988, on the method of payment for 
outlier cases under such section and providing more ade- 

; quate and appropriate payments with respect to burn 

outlier cases. 

(3) Report on outlier payments. — The Secretary of Health 
and Human Services shall include in the annual report sub- 
mitted to the Congress pursuant to section 1875(b) of the Social 
Security Act a comparison with respect to hospitals located in 
an urban area and hospitals located in a rural area in the 
amount of reductions under section 1886(d)(3)(B) of the Social 
Security Act and additional payments under section 
1886(dX5)(A)of such Act. 

(e) Miscellaneous Accounting Provision.— Effective as if in- 
cluded in the enactment of the Omnibus Budget Reconciliation Act 
42 use I395ww of 1986, subsection (d) of section 9307 of such Act is amended to read 
note. as follows: 

"(d) Miscellaneous Accounting Provision. — Notwithstanding 
any other provision of law, for purposes of section 1886(d)(1)(A) of 
the Social Security Act, in the case of a hospital that — 

"(1) had a cost reporting period beginning on September 28, 
29, or 30 of 1985, 

"(2) is located in a State in which inpatient hospital services 
were paid in fiscal year 1985 pursuant to a Statewide dem- 
onstration project under section 402 of the Social Security 
Amendments of 1967 and section 222 of the Social Security 
Amendments of 1972, and 

"(3) elects, by notice to the Secretary of Health and Human 
Services by not later than April 1, 1988, to have this subsection 
apply, 

during the first 7 months of such cost reporting period the 'target 
percentage' shall be 75 percent and the 'DRG percentage' shall be 25 
percent, and during the remaining 5 months of such period the 
'target percentage' and the 'DRG percentage' shall each be 50 
percent.". 

SEC. 4009. MISCELLANEOUS PROVISIONS. 

(a) Responsibilities of Medicare Hospitai^ in Emergency 
Cases.— 

(1) Increase in civil monetary penalty.— Section 1867(d)(2) 
of the Social Security Act (42 U.S.C. 1395dd(d)(2)) is amended by 
striking "$25,000" and inserting "$50,000". 



'Copy read "PiioPAC* 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-57 



(2) Exclusion from medicare program for violations. — 
Section 1867(d)(1) of such Act is amended by adding at the end 
the following new sentence: 

"If a civil money penalty is imposed on a responsible physician 
under paragraph (2), the Secretary may impose the sanction de- 
scribed in section 1842(j)(2)(A) (relating to barring from participation 
in the medicare program) in the same manner as it is imposed under 
section 1842(j).". 

(3) Effective date. — The amendments made by this subsec- 
tion shall apply to actions occurring on or after the date of the 
enactment of this Act. 

(b) Designation of Pediatric Hospitals as Meeting Certifi- 
cation AS Heart Transplant Facility. — For purposes of determin- 
ing whether a pediatric hospital that performs pediatric heart 
transplants meets the criteria established by the Secretary of 
Health and Human Services for facilities in which the heart trans- 
plants performed will be considered to meet the requirement of 
section 1862(a)(1)(A) of the Social Security Act, the Secretary shall 
treat such a hospital as meeting such criteria if — 

(1) the hospital's pediatric heart transplant program is oper- 
ated jointly by the hospital and another facility that meets such 
criteria, 

(2) the unified program shares the same transplant surgeons 
and quality assurance program (including oversight committee, 
patient protocol, and patient selection criteria), and 

(3) the hospital demonstrates to the satisfaction of the 
Secretary that it is able to provide the specialized facilities, 
services, and personnel that are required by pediatric heart 
transplant patients. 

(c) Waiver of Inpatient Limitations for the Connecticut Hos- 
pice, Subsection (a) of section 9307 of the Omnibus Budget Rec- 
onciliation Act of 1986 is amended — 

(1) by striking "Temporary" in the heading, and 

(2) by striking "for hospice care provided before October 1, 
1988,". 

(d) Revision of Appointment Process for Prospective Payment 
Assessment Commission.— 

(1) In general.— Section 1886(e)(6)(B) of the Social Security 
Act (42 U.S.C. 1395ww(e)(6)(B)) is amended— 

(A) in the first sentence, by striking "provide expertise 
and experience in the provision and financing of health 
care" and inserting "include individuals with national rec- 
ognition for their expertise in health economics, hospital 
reimbursement, hospital financial management, and other 
related fields, who provide a mix of different professionals, 
broad geographic representation, and a balance between 
urban and rural representatives,"; and 

(B) by striking the last sentence. 

(2) Effective date. — The amendments made by paragraph (1) 
shall apply to appointments made after the date of the enact- 
ment of this Act. 

(e) Psychologists* Services Furnished to Hospital 
Inpatients.— 



42 use 1395dd 
note. 



42 use 1395y 
note. 



100 Stat. 1995. 



42 use 1395WW 
note. 



Copy read "limitations for the Connecticut hospice.". 



101 STAT. 1330-58 



PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1395x 
note. 



42 use 1320b- 
note. 



Effective date. 
42 use 1320b-8 
note. 

42 use 1395WW 
note. 



42 use 1395WW 
note. 



(1) In general.— Section 1861(b)(3) of such Act (42 U.S.C 
1395x(b)(3)) is amended by inserting "(including clinical 
psychologist (as defined by the Secretary))" after "others" the 
first place it appears. 

(2) Effective date. — The amendment made by paragraph (1) ij| 
shall apply with respect to services furnished on or after 
April 1, 1988. 

if) Hospital Condition of Participation Related to Individual 
Responsible for Care of Patient.— Section 1861(e)(4) of such Act 
(42 U.S.C. 1395x(e)(4)) is amended by inserting "with respect to 
whom payment may be made under this title" after "patient". 

(g) Delay in Requirements Relating to Hospital Standards 
FOR Organ Transplants and Standards for Organ Procurement 
Agencies. 

(1) Section 9318(b)(2) of the Omnibus Budget Reconciliation 
Act of 1986, as amended by section 107(c) of the Balanced 
Budget and Emergency Deficit Control Reaffirmation Act of 
1987, is amended by striking "November 21, 1987" and inserting 
"March 31, 1988". 

(2) The amendment made by paragraph (1) shall be effective 
as if included in the enactment of the Omnibus Budget Rec- 
onciliation Act of 1986. 

(h) ProPAC Studies and Reports. — 

(1) Prop AC reports on study of drg rates for hospitals in 
RURAL AND URBAN AREAS. — The Prospective Payment Assess- 
ment Commission shall evaluate the study conducted by the 
Secretary of Health and Human Services pursuant to section 
603(aX2)(C)(i) of the Social Security Amendments of 1983 (relat- 
ing to the feasibility, impact, and desirability of eliminating or 
phasing out separate urban and rural DRG prospective pay- 
ment rates) and report its conclusions and recommendations to 
the Congress not later than March 1, 1988. 

(2) Propac report on separate urban payment rates.— The 
Prospective Payment Assessment Commission shall evaluate 
the desirability of maintaining separate DRG prospective pay- 
ment rates for hospitals located in large urban areas (as defined 
in section 1886(dX2XD)) of the Social Security Act) and in other 
urbsm areas, and shall report to Congress on such evaluation 
not later than January 1, 1989. 

(3) Report on adjustment for non-labor costs.— The 
Prospective Payment Assessment Commission shall perform an 
analysis to determine the feasibility and appropriateness of 
adjusting the non-wage-reiated portion of the adjusted average 
standardized amounts under section 1886(dX3) of the Social 
Security Act based on area differences in hospitals' costs (other 
than wage-related costs) and input prices. The Commission shall 
report to the Congress on such analysis by not later than 
October 1, 1989. 

(i) Special Rule.— In the case of New England county metropoli- 
tan areas, the Secretary of Health and Humsm Services shall apply 
the second sentence of section 1886(dX2XD) of the Social Security 
Act, as amended by section 4001(b) of this subtitle, as though 970,000 
were substituted for 1,000,000. 

(j) Technical Corrections.— 

(1) Section 1886(aX4) of the Social Security Act (42 U.S.C. 
1395ww(aX4)) is amended by inserting a comma after "edu- 
cational activities". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-59 



(2) Section 1886(d)(5)(C)(i)(II) of such Act (42 U.S.C. 
1395ww(d){5)(C)(iXn)) is amended by inserting "index" after 
"case mix" both places it appears. 

(3j Section 1886(d)(5)(F) of such Act (42 U.S.C. 1395ww(d)(5)(F)) 
is amended — 

(A) in clause (i)(II), by striking "such revenues" the 
second place it appears and inserting "such net inpatient 
care revenues", and 

(B) in clause (iv)(I), by striking "subclause (III)" and 
inserting "clause (v)". 

(4) Section 1886(d)(9) of such Act (42 U.S.C. 1395ww(d)(9)) is 
amended by moving the matter in subparagraph (B) before 
clause (i) 2 ems to the left so the left margin of such matter is 
aligned with the left margin of the matter in subparagraph (A) 
before clause (i) 

(5) Section 1886(h)(4)(C) of such Act (42 U.S.C. 1395ww(h)(4)(C)) 
is amended by striking "subparagraph (E)" and inserting 
"subparagraph (D)". 

(6) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986 — 

(A) subparagraph (B) of section 9307(c)(1) of such Act is 
amended to read as follows: 

"(B) in paragraph (2)— 

"(i) by striking subparagraphs (A) and (B), 
"(ii) in subparagraph (C), by striking 'such subsection' 
and inserting 'of section 1886(d) of the Social Security Act 
(42 U.S.C. 1395ww(d)* and by redesignating such subpara- 
graph as subparagraph (A), and 

"(iii) by amending subparagraph (D) to read as follows: 
" *(B) The amendments made by subparagraph (A) apply to 
discharges occurring on or after May 1, 1986.' "; 

(B) section 9302(a)(2)(C) of such Act is amended by strik- 
ing "1866(eX5)" and inserting "1886(eX5)"; 

(C) section 9320(hXl) of such Act is amended by striking 
"before the period" and inserting "before the semicolon"; 

(D) section 9321(cX4) of such Act is amended by striking 
"second sentence" and all that follows through "operating 
costs" and inserting "second sentence of section 1886(a)(4) of 
the Social Security Act, from the term 'operating costs"; 

(E) the second sentence of section 9335(dX2) of such Act is 
amended by striking "establish" and inserting "designate"; 
and 

(F) section 9321(cX3) of such Act is amended by inserting 
"section 1861(vXlXO) and 1886(gX2) of the Social Security 
Act and" after "implementing". 

(7) Section 218(v) of the Social Security Act (42 U.S.C. 418(v)) is 
amended by striking paragraph (3). 

(8) Effective as if included in the Tax Reform Act of 1986, 
section 1895(dX6XC) of such Act is amended by striking "603" 
and inserting "2203". 



42 use 1395WW. 



42 use 1395WW 
note. 

42 use 1395WW. 

42 use 1395y. 

42 use 1395WW 
note. 



42 use 1395rr 
note. 



42 use 1395WW 
note. 



42 use 300bb-6. 



101 STAT. 1330-60 PUBLIC LAW 100-203— DEC. 22, 1987 



PART 2— PROVISIONS RELATING TO PARTS A 

ANDB 

Subpart A — Health Maintenance Organization 
Reforms 

SEC. 4011. BENEFICIARY PROTECTION. 

(a) Post-Contract Protection for Enrollees with Eligible 
Organizations Under the Medicare Program.— 

(1) Section 1876(c)(3) of such Act (42 U.S.C. 1395mm(b)(2)) is 
amended by adding at the end the following new subparagraph: 
"(F) Each eligible organization that provides items and 
services pursuant to a contract under this section shall 
provide assurances to the Secretary that in the event the 
organization ceases to provide such items and services, the 
organization shall provide or arrange for supplemental cov- 
erage of benefits under this title related to a pre-existing 
condition with respect to any exclusion period, to all 
individuals enrolled with the entity who receive benefits 
under this title, for the lesser of six months or the duration 
of such period.". 

42 use 1395mm (2) The amendment made by paragraph (1) shall apply with 

i^ote. respect to contracts entered into or renewed on or after the date 

of enactment of this Act. 

(b) Notification of Termination of Risk-Sharing Contract.— 

(1) Section 1876(c)(3) of such Act, as amended by subsection 
(a)(1), is further amended by adding at the end the following 
new subparagraph: 
"(G)(i) Each eligible organization having a risk-sharing contract 
under this section shall notify individuals eligible to enroll with the 
organization under this section and individuals enrolled with the 
organization under this section that — 

"(I) the organization is authorized by law to terminate or 
refuse to renew the contract, and 

"(II) termination or nonrenewal of the contract may result in 
termination of the enrollments of individuals enrolled with the 
organization under this section, 
"(ii) The notice required by clause (i) shall be included in— 
"(I) any marketing materials described in subparagraph (C) 
that are distributed by an eligible organization to individuals 
eligible to enroll under this section with the organization, and 
"(II) any explanation provided to enrollees by the organiza- 
tion pursuant to subparagraph (E).". 
42 use 1395mm (2) The amendment made by paragraph (1) shall apply to 

note. contracts entered into or renewed on or after the date of the 

enactment of this Act. 

SEC. 4012. PAYMENTS FOR HOSPITAL SERVICES. 

(a) In General.— Section 1866(a)(1) of such Act (42 U.S.C. 
1395cc(a)(l)) is amended by inserting immediately after subpara- 
graph (N) the following new subparagraph: 
Contracts. "(O) in the case of hospitals and skilled nursing facilities, to 

accept as payment in full for inpatient hospital and extended 



26 Copy read "under". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-61 



care services that are covered under this title and are furnished 
to any individual enrolled with an eligible organization with a 
risk-sharing contract under section 1876 the amounts (in the 
case of hospitals) or limits (in the case of skilled nursing facili- 
ties) that would be made as a payment in full under this title if 
the individuals were not so enrolled.". 

(b) Repeal.— Section 1876(g)(4) of the Social Security Act (42 
U.S.C. 1395mm(g)(4)) is repealed. 

(c) Implementation. — The Secretary of Health and Human Serv- 
ices shall provide (in machine readable form) to eligible organiza- 
tions under section 1876 of the Social Security Act medicare DRG 
rates for payments required by the amendment made by paragraph 
(2) and data on cost pass-through items for all inpatient services 
provided to medicare beneficiaries enrolled with such organizations. 

(d) Effective Date. — The amendments made by subsections (a) 
and (b) shall apply to admissions occurring on or after April 1, 1988, 
or, if later, the earliest date the Secretary can provide the informa- 

, tion required under subsection (c) in machine readable form. 

f! SEC. 4013. TWO-YEAR EXTENSION ON PERIOD FOR BENEFIT STABILIZA- 
TION. 

(a) In General. — Section 1876(g)(5) of the Social Security Act 
i (42 U.S.C. 1395mm(g)(5)), as added by the amendment made by 
I section 2350(a)(2) of the Deficit Reduction Act of 1984, is amended by 
,i striking "four" and inserting "six". 

i| (b) Effective Date. — The amendment made by subsection (a) 
) shall be effective as if included in the enactment of the amendment 
made by section 2350(a)(2) of the Deficit Reduction Act of 1984. 

i 

SEC. 4014. CIVIL MONEY PENALTIES AND INTERMEDIATE SANCTIONS 
AGAINST HMOS/CMPS. 

Section 1876(i)(6) of the Social Security Act (42 U.S.C. 1395mm) is 
amended to read as follows: 
|i "(6)(A) If the Secretary determines that an eligible organization 
I ' with a contract under this section — 

"(i) fails substantially to provide medically necessary items 
and services that are required (under law or under the contract) 
to be provided to an individual covered under the contract, if 
the failure has adversely affected (or has substantial likelihood 
of adversely affecting) the individual; 

"(ii) imposes premiums on individuals enrolled under this 
I section in excess of the premiums permitted; 

"(iii) acts to expel or to refuse to re-enroll an individual in 
violation of the provisions of this section; 

"(iv) engages in any practice that would reasonably be ex- 
pected to have the effect of denying or discouraging enrollment 
(except as permitted by this section) by eligible individuals with 
the organization whose medical condition or history indicates a 
need for substantial future medical services; 

"(v) misrepresents or falsifies information that is furnished — 
"(I) to the Secretary under this section, or 
"(II) to an individual or to any other entity under this 
section; or 

"(vi) fails to comply with the requirements of subsection 
(g)(6)(A); 

the Secretary may provide for any of the remedies described in 
subparagraph (B). 



42 use 1395mm 
note. 



42 use 1395mm 
note. 



42 use 1395mm 
note. 



Contracts. 



101 STAT. 1330-62 PUBLIC LAW 100-203— DEC. 22, 1987 



"(B) The remedies described in this subparagraph are — 

"(i) civil money penalties of not more than $25,000 for each 
determination under subparagraph (A) or, with respect to a 
determination under clause (iv) or (v)(I), of not more than | 
$100,000 for each such determination, 

"(ii) suspension of enrollment of individuals under this section 
after the date the Secretary notifies the organization of a 
determination under subparagraph (A) and until the Secretary 
is satisfied that the basis for such determination has been 
corrected and is not likely to recur, or 

"(iii) suspension of payment to the organization under this 
section for individuals enrolled after the date the Secretary 
notifies the organization of a determination under subpara- 
graph (A) and until the Secretary is satisfied that the basis for 
such determination has been corrected and is not likely to 
recur. 

The provisions of section 11 28 A (other than subsections (a) and (b)) 
shall apply to a civil money penalty under clause (i) in the same 
manner as they apply to a civil money penalty under that section.". 

42 use 1395mm SEC. 4015. MEDICARE PAYMENT DEMONSTRATION PROJECTS. 

(a) Medicare Insured Group Demonstration Projects.— 
Contracts. (1) The Secretary of Health and Human Services (in this 

subsection referred to as the "Secretary") may provide for 
capitation demonstration projects (in this subsection referred to 
as "projects") with an entity which is an eligible organization 
with a contract with the Secretary under section 1876 of the 
Social Security Act or which meets the restrictions and require- 
ments of this subsection. The Secretary may not approve a 
project unless it meets the requirements of this subsection. I 

(2) The Secretary may not conduct more than 3 projects and | 
may not expend, from funds under title XVIII of the Social 
Security Act, more than $600,000,000 in any fiscal year for all 
such projects. 

(3) The per capita rate of payment under a project— 

(A) may be based on the adjusted average per capita cost 
(as defined in section 1876(a)(4) of the Social Security Act) 
determined only with respect to the group of individuals 
involved (rather than with respect to medicare beneficiaries 
generally), but 

(B) the rate of payment may not exceed the lesser of — 

(i) 95 percent of the adjusted average per capita cost 
described in subparagraph (A), or 

(ii) (I) in the 4th year or 5th year of a project, 115 | 
percent of the adjusted average per capita cost (as i 
defined in section 1876(a)(4) of such Act) for classes of 
individuals described in section 1876(a)(1)(B) of that 
Act, or 

(II) in any subsequent year of a project, 95 percent of 
the adjusted average per capita cost (as defined in 
section 1876(a)(4)) for such classes. 

(4) If the pajmient amounts made to a project are greater than 
the costs of the project (as determined by the Secretary or, if, 
applicable, on the basis of adjusted community rates described 
in section 1876(e)(3) of the Social Security Act), the project— 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-63 

(A) may retain the surplus, but not to exceed 5 percent of 
the average adjusted per capita cost determined in accord- 
ance with paragraph (3)(A), and 

(B) with respect to any additional surplus not retained by 
the project, shall apply such surplus to additional benefits 
for individuals served by the project or return such surplus 
to the Secretary. 

(5) Enrollment under the project shall be voluntary. Individ- 
uals enrolled with the project m^ay terminate such enrollment 
as of the beginning of the first calendar month following the 
date on which the request is made for such termination. Upon 
such termination, such individuals shall retain the same rights 
to other health benefits that such individuals would have had if 
they had never enrolled with the project without any exclusion 
or waiting period for pre-existing conditions. 

(6) The requirements of— 

(A) subsection (c)(3)(C) (relating to dissemination of 
information), 

(B) subsection (cX3)(E) (annual statement of rights), 

(C) subsection (cX5) (grievance procedures), 

(D) subsection (c)(6) (on-going quality), 

(E) subsection (g)(6) (relating to prompt payment of 
claims), 

(F) subsection (i)(3)(A) and (B) (relating to access to 
information and termination notices), 

(G) subsection (i)(6) (relating to providing necessary serv- 
ices), and 

(H) subsection (i)(7) (relating to agreements with peer Contracts, 
review organizations), 

of section 1876 of the Social Security Act shall apply to a project 
in the same manner as they apply to eligible organizations with 
risk-sharing contracts under such section. 

(7) The benefits provided under a project must be at least 
actuarially equivalent to the combination of the benefits avail- 
able under title XVIII of the Social Security Act and the 
benefits available through any alternative plans in which the 
individual can enroll through the the employer. The project 
shgdl guarantee the actuarial value of benefits available under 
the employer plan for the duration of the project. 

(8) A project shall comply with all applicable State laws. 

(9) The Secretary may not authorize a project unless the 

, entity offering the project demonstrates to the satisfaction of 
the Secretary that it has the necessary financial reserves to pay 
for any liability for benefits under the project (including those 
liabilities for health benefits under medicare and any supple- 
1} mental benefits). 

(10) The Comptroller General shall monitor projects under Reports, 
this subsection and shall report periodically (not less often than 
once every year) to the Committee on Finance of the Senate and 
the Committee on Energy and Commerce and Committee on 
Ways and Means of the House of Representatives on the status 
of such projects and the affect on such projects of the require- 
ments of this section and shall submit a final report to each 
such committee on the results of such projects. 

(b) Payment Methodology Reform Demonstrations Projects.— 
(1) The Secretary of Health and Human Services (in this 
subsection referred to as the "Secretary") is specifically au- 



101 STAT. 1330-64 PUBLIC LAW 100-203— DEC. 22, 1987 



thorized to conduct demonstration projects under this subsec- 
tion for the purpose of testing alternative payment methodolo- i 
gies pertaining to capitation payments under title XVIII of the 
Social Security Act, including — i 

(A) computing adjustments to the average per capita cost ' 
under section 1876 of such Act on the basis of health status 
or prior utilization of services, and 

(B) accounting for geographic variations in cost in the 
adjusted average per capita costs applicable to an eligible 
organization under such section which differs from pay- , 
ments currently provided on a county-by-county basis. ' 

(2) No project may be conducted under this subsection — 

(A) with an entity which is not an eligible organization 
(as defined in section 187603) of the Social Security Act), and 

(B) unless the project meets all the requirements of 
subsections (c) and (i)(3) of section 1876 of such Act. 

(3) There are authorized to be appropriated to carry out 
projects under this subsection $5,000,000 in each of fiscal years 
1989 and 1990. j 

(c) Application of Provisions.— The provisions of subsection (a)(2) j 
and the first sentence of subsection (b) of section 402 of the Social \ 
Security Amendments of 1967 shall apply to the demonstration 
projects under this section in the same manner as they apply to 
experiments under subsection (a)(1) of that section. 

SEC. 4016. DELAY IN EFFECTIVE DATE IN PHYSICIAN INCENTIVE RULES 
FOR HEALTH MAINTENANCE ORGANIZATIONS. 

I 

Section 9313(c)(2)(B) of the Omnibus Budget Reconciliation Act of 
1986 is amended by striking "April 1, 1989" and inserting "April 1, 
1990". ' 

42 use 1395mm SEC. 4017. GAO STUDY AND REPORTS ON MEDICARE CAPITATION. 

"^^^ (a) Study. — The Comptroller General shall conduct a study on 

medicare capitation rates that shall include an analysis and assess- 
ment of— 

(1) the current method for computing per capita rates of 
payment under section 1876 of the Social Security Act (includ- 
ing the method for determining the United States per capita 
cost); 

(2) the method for establishing relative costs for geographic 
areas and the data used to establish age, sex, and other 
weighting factors; 

(3) ways to refine the calculation of adjusted average per 
capita costs under section 1876 of such Act (including making i 
adjustments for health status or prior utilization of services and 
improvements in the definition of geographic areas); 

Contracts. (4) the extent to which individuals enrolled with organizations 

with a risk-sharing contract with the Secretary under section 
1876 of such Act differ in utilization and cost from fee-for- 
service beneficiaries and ways for modifying enrollment pat- 
terns through program changes or for reflecting the differences 
in rates through group experience rating or other means; 

(5) approaches for limiting the liability of the contracting 
organization under section 1876 of such Act in catastrophic 
cases; 



Appropriation 
authorization. 



42 use 1320a-7a 
note. 

100 Stat. 2002. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-65 



(6) ways of establishing capitation rates on a basis other than 
fee-for-service experience in areas with high prepaid market 
penetration; and 

(7) methods for providing the rate levels necessary to main- 
tain access to quality prepaid services in rural or medically 
underserved areas (while maintaining cost savings). 

(b) Reports.— 

(1) Not later than January 1 of 1989 and 1990, the Comptrol- 
ler General shall submit to the Committee on Finance of the 
Senate and the Committee on Energy and Commerce and 
Committee on Ways and Means of the House of Representatives 
interim reports on the progress of the study conducted under 
subsection (a). 

(2) Not later than January 1, 1991, the Comptroller General 
shall submit to each such committee a final report on the 
results of such study. 

SEC. 4018. SPECIAL RULES. 

(a) Assignment of Members for HIP Health Maintenance 
Organization.— Section 1876(f) of such Act (42 U.S.C. 1395mm(f)) is 
amended by redesignating paragraph (3) as paragraph (4) and by 
inserting after paragraph (2) the following new paragraph: 

*'(3)(A) An eligible organization described in subparagraph (B) 
may elect, for purposes of determining the compliance of a subdivi- 
sion, subsidiary, or affiliate described in subparagraph (BXiii) with 
the requirement of paragraph (1) for the period before October 1, 
1992, to have members of the subdivision, subsidiary, or affiliate 
considered to be members of the parent organization. 

"(B) An eligible organization described in this subparagraph is an 
eligible organization which — 

"(i) is described in section 1903(m)(2)(BXiii); 
"(ii) has members who have a collectively bargained contrac- 
tual right to obtain health benefits from the organization; 

"(iii) elects to provide benefits under a risk-sharing contract Contracts, 
to individuals residing in a service area, who have a collectively 
bargained contractual right to obtain benefits from the 
organization, through a subdivision, subsidiary, or affiliate 
which itself is an eligible organization serving the area and 
which is owned or controlled by the parent eligible organization; 
and 

**(iv) has assumed any risk of insolvency and quality assur- 
ance with respect to individuals receiving benefits through such 
a subdivision, subsidiary, or affiliate.". 

(b) Extension of Waivers for Social Health Maintenance 
Organizations.— 

(1) The Secretary of Health and Human Services shall extend 
without interruption, through September 30, 1992, the approval 
of waivers granted under subsection (a) of section 2355 of the 
Deficit Reduction Act of 1984 for the demonstration project 
described in subsection Ot>) of that section, subject to the terms 
and conditions (other than duration of the project) established 
under that section (as amended by paragraph (2) of this subsec- 
tion). 

(2) Section 23550bX5) of the Deficit Reduction Act of 1984 is 98 Stat. 1103. 
amended by inserting "and in succeeding years" after "third 

year". 



19-139 0 - 88 — 3 ( 203) 



101 STAT. 1330-66 PUBLIC LAW 100-203— DEC. 22, 1987 



(3) Section 2355(d)(2) of the Deficit Reduction Act of 1984 is 
amended by striking 'Tinal" and inserting "interim". 
Reports. (4) The Secretary of Health and Human Services shall submit 

a final report to the Congress on the project referred to in 
paragraph (1) not later than March 31, 1993. 

(c) Treatment of Michigan Blue Care HMO Network Under 
50 Percent Rule. — Blue Care, Inc., a nonprofit corporation which is 
indirectly owned and operated by Blue Cross and Blue Shield of 
Michigan, Inc. and which enrolls individuals for the purpose of 
providing them with health care services through assignment to 
health maintenance organizations which are indirectly or wholly 
owned and operated by Blue Cross and Blue Shield of Michigan, Inc., 
is deemed to meet the requirement of section 1876(f)(1) of the Social 
Security Act (relating to limitation on enrollment of medicare and 
medicaid beneficiaries with an eligible organization) if— 

(1) such requirement would be met if applied to all individuals 
enrolled with (or otherwise assigned to) each of such health 
maintenance organizations, and 

(2) not more than 20 percent of the number of individuals who 
are members of (or otherwise assigned to) each such organiza- 
tion consists of individuals who are entitled to benefits under 
title XVIII of the Social Security Act. 

(d) Temporary Waiver for Watts Health Foundation.— Section 
42 use 1395mm 9312(c)(3) of the Omnibus Budget Reconciliation Act of 1986 is 
note. amended by adding at the end the following new subparagraph: 

Grants. "(D) TREATMENT OF CERTAIN WAIVERS.— In the Case of an 

eligible organization (or successor organization) that is de- 
scribed in clauses (i) and (ii) of subparagraph (C) and that 
received a grant or grants totaling at least $3,000,000 in 
fiscal year 1987 under section 329(d)(1)(A) or 330(d)(1) of the 
Public Health Service Act — 

"(i) before January 1, 1990, section 1876(f) of the 
Social Security Act shall not apply to the organization; 

"(ii) beginning on January 1, 1990, the Secretary of 
Health and Human Services shall waive the require- 
ment of such section with respect to the organization 
if— 

"(I) before such date, the organization has 
submitted to the Secretary a schedule for the 
organization to comply with the requirement of 
section 1876(f)(1) of such Act, and the Secretary has 
found such schedule to be reasonable and has ap- 
proved such schedule; and 
, "(II) periodically after such date, the Secretary 

reviews the organization's compliance with such 
schedule and determines that the organization has 
complied, or made significant progress towards 
compliance, with such schedule; and 
"(iii) after Januai*y 1, 1990, if the Secretary has 
approved a schedule under clause (ii)(I) and has deter- 
mined, in a periodic review under clause (ii)(II), that 
* the organization has not complied, or made significant 

progress towards compliance, with such schedule, the 
Secretary may provide for a sanction described in sec- 



Copy read "under". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-67 



tion 1876(f)(3) of the Social Security Act effective with 
respect to individuals enrolling with the organization 
after the date the Secretary notifies the organization of 
such noncompliance.". 

Subpart B — Home Health Quality 

SEC. 4021. CONDITIONS OF PARTICIPATION FOR HOME HEALTH 
AGENCIES. 

(a) Definition of Home Health Agency.— Section 1861(o)(6) of 
the Social Security Act (42 U.S.C. 1395x(o)(6)) is amended by insert- 
ing "the conditions of participation specified in section 1891(a) and" 
after "meets". 

Cb) Conditions of Participation. — Title XVIII of such Act is 
amended by adding at the end the following new section: 

"conditions of participation for home health agencies; home 
health quauty 

"Sec. 1891. (a) The conditions of participation that a home health 42 USC I395bbb. 
agency is required to meet under this subsection are as follows: 
"(1) The agency protects and promotes the rights of each 
individual under its care, including each of the following rights: 
"(A) The right to be fully informed in advance about the 
care and treatment to be provided by the agency, to be fully 
informed in advance of any changes in the care or treat- 
ment to be provided by the agency that may affect the 
individual's well-being, and (except with respect to an 
individual adjudged incompetent) to participate in planning 
care and treatment or changes in care or treatment. 

"(B) The right to voice grievances with respect to treat- 
ment or care that is (or fails to be) furnished without 
discrimination or reprisal for voicing grievances. 

"(C) The right to confidentiality of the clinical records 
described in section 1861(o)(3). 

"(D) The right to have one's property treated with 
respect. 

"(E) The right to be fully informed orally and in writing 
(in advance of coming under the care of the agency) of — 

"(i) all items and services furnished by (or under 
arrangements with) the agency for which payment may 
be made under this title, 

"(ii) the coverage available for such items and serv- 
ices under this title, title XIX, and any other Federal 
program of which the agency is reasonably aware, 

"(iii) any charges for items and services not covered 
under this title and any charges the individual may 
have to pay with respect to items and services fur- 
nished by (or under arrangements with) the agency, 
and 

"(iv) any changes in the charges or items and services 
described in clause (i), (ii), or (iii). 
"(F) The right to be fully informed in writing (in advance 
of coming under the care of the agency) of the individual's 
rights £uid obligations under this title. 



101 STAT. 1330-68 PUBLIC LAW 100-203— DEC. 22, 1987 

"(G) The right to be informed of the availability of the 
State home health agency hot-line established under sec- 
tion 1864(a). 

"(2) The agency notifies the State entity responsible for the 
licensing or certification of the agency of a change in — 

'*( A) the persons with an ownership or control interest (as 
defined in section 1124(a)(3)) in the agency, 

"(B) the persons who are officers, directors, agents, or 
managing employees (as defined in section 1126(b)) of the 
agency, and 

"(C) the corporation, association, or other company 
responsible for the management of the agency. 
Such notice shall be given at the time of the change and shall 
include the identity of each new person or company described in 
the previous sentence. 

"(3)(A) The agency must not use as a home health aide (on a 
full-time, temporary, per diem, or other basis), any individual 
who is not a licensed health care professional (as defined in 
subparagraph (F)) to provide items or services described in 
section 1861(m) on or after January 1, 1990, unless the individ- 
ual — 

"(i) has completed a training and competency evaluation 
program, or a competency evaluation program, that meets 
the minimum standards established by the Secretary under 
subparagraph (D), and 
"(ii) is competent to provide such items and services. 
For purposes of clause (i), an individual is not considered to 
have completed a training and competency evaluation program, 
or a competency evaluation program if, since the individual's 
most recent completion of such a program, there has been a 
continuous period of 24 consecutive months during none of 
which the individual provided items and services described in 
section 1861(m) for compensation. 

"(B)(i) The agency must provide, with respect to individuals 
used as a home health aide by the agency as of July 1, 1989, for 
a competency evaluation program (as described in subpara- 
graph (A)(i)) and such preparation as may be necessary for the 
individual to complete such a program by January 1, 1990. 

"(ii) The agency must provide such regular performance 
review and regular in-service education as assures that individ- 
uals used to provide items and services described in section 
1861(m) are competent to provide those items and services. 

"(C) The agency must not permit an individual, other than in 
a training and competency evaluation program that meets the 
minimum standards established by the Secretary under 
subparagraph (D), to provide items or services of a type for 
which the individual has not demonstrated competency. 

"(D)(i) The Secretary shall establish minimum standards for 
the programs described in subparagraph (A) by not later than 
October 1, 1988. 

"(ii) Such standards shall include the content of the curricu- 
lum, minimum hours of training, qualification of instructors, 
* and procedures for determination of competency. 

"(iii) Such standards may permit approval of programs of- 
fered by or in home health agencies, as well as outside agencies 
(including employee organizations), and of programs in effect on 
the date of the enactment of this section; except that they may 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-69 



not provide for the approval of a program offered by or in a 
home health agency which has been determined to be out of 
compliance with the requirements specified in or pursuant to 
section 1861(o) or subsection (a) within the previous 2 years. 

"(iv) Such standards shall permit a determination that an 
individual who has completed (before July 1, 1989) a training 
and competency evaluation program or a competency evalua- 
tion program shall be deemed for purposes of subparagraph (A) 
to have completed a program that is approved by the Secretary 
under the standards established under this subparagraph if the 
Secretary determines that, at the time the program was offered, 
the program met such standards. 

"(E) In this paragraph, the term 'home health aide' means 
any individual who provides the items and services described in 
section 1861(m), but does not include an individual — 

"(i) who is a licensed health professional (as defined in 
subparagraph (F)), or 

"(ii) who volunteers to provide such services without 
monetary compensation. 

"(F) In this paragraph, the term 'licensed health professional' 
means a physician, physician assistant, nurse practitioner, 
physical, speech, or occupational therapist, registered profes- 
sional nurse, licensed practical nurse, or licensed or certified 
social worker. 

"(4) With respect to durable medical equipment furnished to 
individuals tor whom the agency provides items and services, 
suppliers of such equipment do not use (on a full-time, tem- 
porary, per diem, or other basis) any individual who does not 
meet minimum training standards (established by the Secretary 
by October 1, 1988) for the demonstration and use of any such 
equipment furnished to individuals with respect to whom pay- 
ments may be made under this title. 

"(5) The agency includes an individual's plan of care required 
under section 1861(m) as part of the clinical records described in 
section 1861(o)(3). 

"(6) The agency operates and provides services in compliance 
I with all applicable Federal, State, and local laws and regula- 
tions (including the requirements of section 1124) and with 
accepted professional standards and principles which apply to 
professionals providing items and services in such an agency. 
"(b) It is the duty and responsibility of the Secretary to assure 
that the conditions of participation and requirements specified in or 
I pursuant to section 1861(o) and subsection (a) of this section and the 
enforcement of such conditions and requirements are adequate to 
protect the health and safety of individuals under the care of a home 
health agency and to promote the effective and efficient use of 
1 public moneys.". 

I (c) Effective Date.— Except as otherwise provided, the amend- 42 use I395x 
ments made by subsections (a) and (b) shall apply to home health 
agencies as of the first day of the 18th calendar month that begins 
after the date of the enactment of this Act. 

j SEC. 4022. STANDARD AND EXTENDED SURVEY. 

i (a) In General.— Section 1891 of the Social Security Act (as added 
by section 4021) is amended by adding at the end the following new 
subsections: 



101 STAT. 1330-70 PUBLIC LAW 100-203— DEC. 22, 1987 



"(c)(1) Any agreement entered into or renewed by the Secretary 
pursuant to section 1864 relating to home health agencies shall \ 
provide that the appropriate State or local agency shall conduct, 
without any prior notice, a standard survey of each home health 
agency. Any individual who notifies (or causes to be notified) a home | 
health agency of the time or date on which such a survey is 
scheduled to be conducted is subject to a civil money penalty of not || 
to exceed $2,000. The Secretary shall provide for imposition of civil I 
money penalties under this clause in a manner similar to that for 
the imposition of civil money penalties under section 11 28 A. The 
Secretary shall review each State's or local agency's procedures for ! 
scheduling and conduct of standard surveys to assure that the State 
or agency has taken all reasonable steps to avoid giving notice of I 
such a survey through the scheduling procedures and the conduct of 
the surveys themselves. 

"(2)(A) Except as provided in subparagraph (B), each home health 
agency shall be subject to a standard survey not later than 15 
months after the date of the previous standard survey conducted 
under this paragraph. The statewide"'^'''' average interval between 
standard surveys of any home health agency shall not exceed 12 
months. 

"(B) If not otherwise conducted under subparagraph (A), a stand- \ 
ard survey (or an abbreviated standard survey) of an agency — 
"(i) may be conducted within 2 months of any change of ; 
ownership, administration, or management of the agency to ! 
- determine whether the change has resulted in any decline in i 
the quality of care furnished by the agency, and 

"(ii) shall be conducted within 2 months of when a significant 
number of complaints have been reported with respect to the 
agency to the Secretary, the State, the entity responsible for the 
licensing of the agency, the State or local agency responsible for 
maintaining a toll-free hotline and investigative unit (under 
section 1864(a)), or any other appropriate Federal, State, or local i 
agency. I 
"(C) A standard survey conducted under this paragraph with 
respect to a home health agency — i 
"(i) shall include (to the extent practicable), for a case-mix 
stratified sample of individuals furnished items or services by 
the agency — ( 
"(I) visits to the homes of such individuals, but only with | 
the consent of such individuals, for the purpose of evaluat- j 
ing (in accordance with a standardized reproducible assess- , 
ment instrument (or instruments) approved by the Sec- 
retary under subsection (d)) the extent to which the quality , 
and scope of items and services furnished by the agency j 
attained and maintained the highest practicable functional j 
capacity of each such individual as reflected in such individ- , 
ual's written plan of care required under section 1861(m) 
and clinical records required under section 1861(o)(3); and S 

"(II) a survey of the quality of care and services furnished 
by the agency as measured by indicators of medical, nurs- - 
ing, and rehabilitative care; t 
"(ii) shall be based upon a protocol that is developed, tested, 
and validated by the Secretary not later than January 1, 1989; ^ 
and ' 1 

"(iii) shall be conducted by an individual— f j 



Copy read "Statewide". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-71 



"(I) who meets minimum qualifications established by the 
Secretary not later than July 1, 1989, 

"(II) who is not serving (or has not served within the 
previous 2 years) as a member of the staff of, or as a 
consultant to, the home health agency surveyed respecting 
compliance with the conditions of participation specified in 
or pursuant to section 1861(o) or subsection (a) of this 
section, and 

"(III) who has no personal or familial financial interest in 
the home health agency surveyed. 

"(D) Each home health agency that is found, under a standard 
survey, to have provided substandard care shall be subject to an 
extended survey to review and identify the policies and procedures 
which produced such substandard care and to determine whether 
the agency has complied with the conditions of participation speci- 
fied in or pursuant to section 1861(o) or subsection (a) of this section. 
Any other agency may, at the Secretary's or State's discretion, be 
subject to such an extended survey (or a partial extended survey). 
The extended survey shall be conducted immediately after the 
standard survey (or, if not practical, not later than 2 weeks after the 
date of completion of the standard survey). 

"(E) Nothing in this paragraph shall be construed as requiring an 
extended (or partial extended) survey as a prerequisite to imposing a 
sanction against an agency under subsection (e) on the basis of the 
findings of a standard survey. 

"(d)(1) Not later than January 1, 1989, the Secretary shall des- 
ignate an assessment instrument (or instruments) for use by an 
agency in complying with subsection (c)(2)(C)(I). 

"(2)(A) Not later than January 1, 1991, the Secretary shall— 
"(i) evaluate the assessment process, 

"(ii) report to Congress on the results of such evaluation, and Reports. 

"(iii) based on such evaluation, make such modifications in 
the assessment process as the Secretary determines are appro- 
priate. 

"(B) The Secretary shall periodically update the evaluation con- Reports, 
ducted under subparagraph (A), report the results of such update to 
Congress, and, based on such update, make such modifications in the 
assessment process as the Secretary determines are appropriate. 

"(3) The Secretary shall provide for the comprehensive training of 
State and Federal surveyors in matters relating to the performance 
of standard and extended surveys under this section, including the 
use of any assessment instrument (or instruments) designated under 
paragraph (1).". 

(b) Effective Date. — Except as otherwise specifically provided in 42 USC I395bbb 
section 1891(d) of the Social Security Act (as added by subsection (a)), note, 
the amendment made by subsection (a) shall become effective on the 
first day of the 18th calendar month to begin after the date of the 
enactment of this Act. 

SEC. 4023. ENFORCEMENT. 

Section 1891 of the Social Security Act (as added by section 4021 
and amended by section 4022) is further amended by adding at the 
end the following new subsections: 

"(e)(1) If the Secretary determines on the basis of a standard, 
extended, or partial extended survey or otherwise, that a home 
health agency that is certified for participation under this title is no 
longer in compliance with the requirements specified in or pursuant 



101 STAT. 1330-72 PUBLIC LAW 100-203— DEC. 22, 1987 



to section 1861(o) or subsection (a) and determines that the defi- 
ciencies involved immediately jeopardize the health and safety of 
the individuals to whom the agency furnishes items and services, 
the Secretary shall take immediate action to remove the jeopardy 
and correct the deficiencies through the remedy specified in subsec- 
tion (f)(2)(A)(iii) or terminate the certification of the agency, and 
may provide, in addition, for 1 or more of the other remedies 
described in subsection (f)(2)(A). 

"(2) If the Secretary determines on the basis of a standard, 
extended, or partial extended survey or otherwise, that a home 
health agency that is certified for participation under this title is no 
longer in compliance with the requirements specified in or pursuant 
to section 1861(o) or subsection (a) and determines that the defi- 
ciencies involved do not immediately jeopardize the health and 
safety of the individuals to whom the agency furnishes items and 
services, the Secretary may (for a period not to exceed 6 months) 
impose intermediate sanctions developed pursuant to subsection (f), 
in lieu of terminating the certification of the agency. If, after such a 
period of intermediate sanctions, the agency is still no longer in 
compliance with the requirements specified in or pursuant to sec- 
tion 1861(o) or subsection (a), the Secretary shall terminate the 
certification of the agency. 

"(3) If the Secretary determines that a home health agency that is 
certified for participation under this title is in compliance with the 
requirements specified in or pursuant to section 1861(o) or subsec- 
tion (a) but, as of a previous period, did not meet such requirements, 
the Secretary may provide for a civil money penalty under subsec- 
tion (f)(2)(A)(i) for the days in which it finds that the agency was not 
in compliance with such requirements. 

"(4) The Secretary may continue payments under this title with 
respect to a home health agency not in compliance with the require- 
ments specified in or pursuant to section 1861(o) or subsection (a) 
over a period of not longer than 6 months, if — 

"(A) the State or local survey agency finds that it is more 
appropriate to take alternative action to assure compliance of 
the agency with the requirements than to terminate the certifi- 
cation of the agency, 

"(B) the agency has submitted a plan and timetable for 
corrective action to the Secretary for approval and the Sec- 
retary approves the plan of corrective action, and 

"(C) the agency agrees to repay to the Federal Government 
payments received under this subparagraph if the corrective 
action is not taken in accordance with the approved plan and 
timetable. 

The Secretary shall establish guidelines for approval of corrective 
actions requested by home health agencies under this subparagraph. 

"(D(l) The Secretary shall develop and implement, by not later 
than April 1, 1989— 

"(A) a range of intermediate sanctions to apply to home 
health agencies under the conditions described in subsection (e), 
and 

"(B) appropriate procedures for appealing determinations 
relating to the imposition of such sanctions. 
"(2)(A) The intermediate sanctions developed under paragraph (1) 
shall include — 

"(i) civil money penalties for each day of noncompliance. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-73 

"(ii) suspension of all or part of the payments to which a 
home health agency would otherwise be entitled under this 
title with respect to items and services furnished by a home 
health agency on or after the date on which the Secretary 
determines that intermediate sanctions should be imposed 
pursuant to subsection (e)(2), and 

"(iii) the appointment of temporary management to over- 
see the operation of the home health agency and to protect 
and assure the health and safety of the individuals under 
the care of the agency while improvements are made in 
order to bring the agency into compliance with all the 
requirements specified in or pursuant to section 1861(o) or 
subsection (a). 

The temporary management under clause (iii) shall not be 
terminated until the Secretary has determined that the agency 
has the management capability to ensure continued compliance 
with all the requirements referred to in that clause. 
"(B) The sanctions specified in subparagraph (A) are in addition to 
sanctions otherwise available under State or Federal law and shall 
not be construed as limiting other remedies, including any remedy 
available to an individual at common law. 

"(C) A finding to suspend payment under subparagraph (A)(ii) 
shall terminate when the Secretary finds that the home health 
agency is in substantial compliance with all the requirements speci- 
I ; fied in or pursuant to section 1861(o) and subsection (a). 
I "(3) The Secretary shall develop and implement, by not later than 
April 1, 1989, specific procedures with respect to the conditions 
under which each of the intermediate sanctions developed under 
paragraph (1) is to be applied, including the amount of any fines and 
the severity of each of these sanctions. Such procedures shall be 
designed so as to minimize the time between identification of defi- 
ciencies and imposition of these sanctions and shall provide for the 
imposition of incrementally more severe fines for repeated or uncor- 
rected deficiencies.". 

Oo) Effective Date. — Except as otherwise specifically provided in 42 use I395bbb 
subsections (e) and (f) of section 1891 of the Social Security Act (as note, 
added by subsection (a)), the amendment made by subsection (a) 
shall become effective on the first day of the 18th calendar month to 
begin after the date of the enactment of this Act. 

SEC. 4024. REQUIREMENT THAT INDIVIDUAL BE CONFINED TO HOME. 

(a) Part A.— Section 1814(a) of the Social Security Act (42 U.S.C. 
[ 1395fla)) is amended by adding at the end the following: "For 
purposes of paragraph (2XC), an individual shall be considered to be 
'confined to his home' if the individual has a condition, due to an 
illness or injury, that restricts the ability of the individual to leave 
his or her home except with the assistance of another individual or 
the aid of a supportive device (such as crutches, a cane, a wheel- 
chair, or a walker), or if the individual has a condition such that 
leaving his or her home is medically contraindicated. While an 
1 individual does not have to be bedridden to be considered 'confined 
tto his home', the condition of the individual should be such that 
there exists a normal inability to leave home, that leaving home 
requires a considerable and taxing effort by the individual, and that 
absences of the individual from home are infrequent or of relatively 
short duration, or are attributable to the need to receive medical 
treatment.". 

» 



101 STAT. 1330-74 PUBLIC LAW 100-203— DEC. 22, 1987 



(b) Part B.— Section 1835(a) of such Act (42 U.S.C. 1395n(a)) is 
amended by adding at the end the following: "For purposes of I 
paragraph (2)(A), an individual shall be considered to be 'confined to 
his home' if the individual has a condition, due to an illness or > 
injury, that restricts the ability of the individual to leave his or her I 
home except with the assistance of another individual or the aid of a 
supportive device (such as crutches, a cane, a wheelchair, or a 
walker), or if the individual has a condition such that leaving his or 
her home is medically contraindicated. While an individual does not 
have to be bedridden to be considered 'confined to his home', the 
condition of the individual should be such that there exists a normal 
inability to leave home, that leaving home requires a considerable 
and taxing effort by the individual, and that absences of the individ- 
ual from home are infrequent or of relatively short duration, or are 
attributable to the need to receive medical treatment.". 
42 use I395f (c) Effective Date. — The amendments made by subsections (a) 
and (b) shall apply to items and services provided on or after ' 
January 1, 1988. 

SEC. 4025. HOME HEALTH TOLL-FREE HOTLINE AND INVESTIGATIVE ( 
UNIT. I' 

(a) In General.— Section 1864(a) of the Social Security Act (42 i 
U.S.C. 1395aa(a)) is amended by adding at the end the following: j 
"Any agreement under this subsection shall provide for the appro- 1 
priate State or local agency to maintain a toll-free hotline (1) to ; 
collect, maintain, and continually update information on home 
health agencies located in the State or locality that are certified to i i 
participate in the program established under this title (which 
information shall include any significant deficiencies found with i , 
respect to patient care in the most recent certification survey , I 
conducted with respect to the agency, when that survey was com- i i 
pleted, whether corrective actions have been taken or are planned, 
and the sanctions, if any, imposed under this title with respect to j s 
the agency) and (2) to receive complaints (and answer questions) ! i 
with respect to home health agencies in the State or locality. Any 1* s 
such agreement shall provide for such agency to maintain a unit for * s 
investigating such complaints that possesses enforcement authority 
and has access to survey and certification reports, information ' ^ 
gathered by any private accreditation agency pursuant to an agree- ^ ^ 
ment with the Secretary under section 1864, and consumer medical ' ^ 
records (but only with the consent of the consumer or his or her ^jl ^' 
legal representative).". ! 
42 use I395aa (b) EFFECTIVE Date. — The amendment made by subsection (a) 
^^^^ shall apply with respect to agreements entered into or renewed on , 

or after the date of enactment of this Act. 

SEC. 4026. HOME HEALTH AGENCY COST LIMITS. > 

(a) Data Used to Determine Limits.— 

(1) Section 1861(vXl)(L) of the Social Security Act (42 U.S.C. 
1395x(v)(lXL)) is amended by adding at the end the following 
new clause: ^ ^ 

"(iii) In establishing limits under this subparagraph, the Secretary ^ ^ 
shall- 

"(I) utilize a wage index that is based on audited wage data ^ 
obtained from home health agencies, and , 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-75 



"(ID base such limits on the most recent audited wage data 
available, which data may be for cost reporting periods begin- 
ning no earlier than July 1, 1985.". 

(2) The amendment made by paragraph (1) shall apply to cost 42 USC 1395x 
reporting periods beginning on or after July 1, 1988. ^o^®- 
(b) Study of Limits. — The Secretary of Health and Human Serv- Reports, 
ices shall study and report to the Congress, not later than June 1, 
1988, on— 

(1) whether the separate schedules of cost limits currently 
applied to home health agencies under title XVIII of the Social 
Security Act located in urban and rural areas accurately reflect 
differences in the costs of urban and rural home health agen- 
cies, and 

(2) the appropriateness of modifying such limits to take into 
account the proportion of agency patients who are from urban 
and rural areas. 

SEC. 4027. HOME HEALTH PROSPECTIVE PAYMENT DEMONSTRATION 
PROJECT. 

(a) In General. — The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall provide for a 
demonstration project to develop and test alternative methods of 
paying home health agencies on a prospective basis for services 
furnished under the medicare and medicaid programs. The project 
shall be designed in a manner to enable the Secretary to evaluate 
the effects of various methods of prospective payment (including 
payments on a per-visit, per-case, and per-episode basis) on program 
expenditures, access to, and quality of, home health care, and home 
health agency operations. The Secretary shall assure that services 
are first furnished under the project not later than July 1, 1988, and, 
for this purpose, the Secretary may reinstate a previously awarded 
contract, or award a sole source contract, to carry out the project. 

(b) Funding. — The provisions of subsection (a)(2) and the first 
sentence of subsection (b) of section 402 of the Social Security 
Amendments of 1967 shall apply to the demonstration project under 
subsection (a) of this section as they apply to experiments under 
subsection (aXD of that section. 

(c) Report. — The Secretary shall submit to Congress, not later 
than one year after the date of the enactment of this Act, an interim 
report on the demonstration project and, not later than four years 
after the date of the enactment of this Act, a final report on the 
results of the project. 

Subpart C — Other Provisions 

SEC. 4031. PAYMENT CYCLE STANDARDS. 

(a) Payment Floor Standards.— 

(1) Section 1816(c) of the Social Security Act (42 U.S.C. 
1395h(c)) is amended by adding at the end the following new 
paragraph: 

"(3XA) Each agreement under this section shall provide that no 
payment shadl be issued, mailed, or otherwise transmitted with 

J respect to any claim submitted under this title within the applicable 
number of calendar days after the date on which the claim is 

1 received. 

"(B) In this paragraph, the term 'applicable number of calendar 
days' means — 



42 USC 1395n 
note. 



Contracts. 



101 STAT. 1330-76 PUBLIC LAW 100-203— DEC. 22, 1987 



Contracts. 



42 use 1395h 
note. 

Contracts. 
Regulations. 



42 use 1395h 
note. 



42 use 1395h 
note. 



"(i) with respect to claims received in the 3-month period 
beginning July 1, 1988, 10 days, and 

"(ii) with respect to claims received in the 12-month period 
beginning October 1, 1988, 14 days."."** 

(2) Section 1842(c) of such Act (42 U.S.C. 1395u(c)) is amended 
by adding at the end the following new paragraph: 

"(3)(A) Each contract under this section which provides for the 
disbursement of funds, as described in subsection (a)(1)(B), shall 
provide that no payment shall be issued, mailed, or otherwise 
transmitted with respect to any claim submitted under this title 
within the applicable number of calendar days after the date on 
which the claim is received. 

"(B) In this paragraph, the term 'applicable number of calendar 
days* means— 

"(i) with respect to claims received in the 3-month period 
beginning July 1, 1988, 10 days, and 

"(ii) with respect to claims received in the 12-month period 
beginning October 1, 1988, 14 days."."'' 

(3) (A) The amendments made by paragraphs (1) and (2) shall 
apply to claims received on or after July 1, 1988. 

(B) The Secretary of Health and Human Services shall pro- 
vide for such timely amendments to agreements under section 
1816 of the Social Security Act and contracts under section 1842 
of such Act, and regulations, to such extent as may be necessary 
to implement the provisions of this subsection on a timely basis. 

(b) Prohibition of Other Policies Intended to Slow Down 
Medicare Payments. — Notwithstanding any other provision of law, 
except as specifically provided in this section, the Secretary of 
Health and Human Services is not authorized to issue, after the date 
of the enactment of this Act, and before October 1, 1990, any final 
regulation, instruction, or other policy change which is primarily 
intended to have the effect of slowing down claims processing, or 
delaying payment of claims, under title XVIII of the Social Security 
Act. 

(c) Budget Considerations.— For purposes of section 202 of the 
Balanced Budget and Emergency Deficit Control Reaffirmation Act 
of 1987, this section is a necessary (but secondary) result of a 
signifi.cant policy change. 

SEC. 4032. DENIALS AND RECONSIDERATIONS OF CLAIMS FOR HOME 
HEALTH SERVICES, EXTENDED CARE SERVICES. AND POST- 
HOSPITAL EXTENDED CARE SERVICES. 

(a) Notification and Physician Review. — Section 1816 of the 
Social Security Act (42 U.S.C 1395h) is amended by adding at the 
end the following new subsection: 

"0) An agreement with an agency or organization under this 
section shall require that, with respect to a claim for home health 
services, extended care services, or post-hospital extended care serv- 
ices submitted by a provider to such agency or organization that is 
denied, such agency or organization— 

"(1) furnish the provider and the individual with respect to 
whom the claim is made with a written explanation of the 
denial and of the statutory or regulatory basis for the denial; 
and 

"(2) promptly notify such individual and the provider of 
disposition of such reconsideration.". 



Copy read "days." 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-77 



(b) Performance Standards for Fiscal Intermediaries and 
Carriers.— Section 1816(f) of such Act (42 U.S.C. 1395h(f)) is 
amended by adding at the end the following: "Such standards and 
criteria shall include with respect to claims for services furnished 
under this part by any provider of services other than a hospital 
whether such agency or organization is able to process 75 percent of 
reconsiderations within 60 days (except in the case of the fiscal year 
1989, 66 percent of reconsiderations) and 90 percent of reconsider- 
ations within 90 days and the extent to which its determinations are 
reversed on appeal.". 

(c) Effective Date. — 

(IX A) The amendment made by subsection (a) shall apply with 
respect to claims received on or after January 1, 1988. 

(B) The amendment made by subsection (b) shall apply with 
respect to claims filed on or after October 1, 1988. 

(2) The Secretary of Health and Human Services shall provide 
for such timely amendments to agreements under section 1816 
and contracts under section 1842 of the Social Security Act, and 
regulations, to such extent as may be necessary to implement 
the amendments made by subsections (a) and (b) on a timely 
basis. 



42 use 1395h 
note. 



Contracts. 
Regulations. 



SEC. 4033. PERMITTING DISABLED INDIVIDUALS TO RENEW ENTITLE- 
MENT TO MEDICARE AFTER GAINFUL EMPLOYMENT WITH- 
OUT A 2-YEAR WAITING PERIOD. 

(a) In General.— 

(1) Section 226(f) of the Social Security Act (42 U.S.C. 426(f)) is 
amended by inserting before the period at the end the following: 

unless the physical or mental impairment which is the basis 
for disability is the same as (or directly related to) the physical 
or mental impairment which served as the basis for disability in 
such previous period". 

(2XA) The amendment made by subsection (a) shall apply to 42 USC 426 note, 
months beginning after the end of the 60-day period beginning 
on the date of enactment of this Act. 

(B) The amendment made by subsection (a) shall not apply so 
as to include (for the purposes described in section 226(f) of the 
Social Security Act) monthly benefits paid for any month in a 
previous period (described in that section) that terminated 
before the end of the 60-day period described in paragraph (1). 

SEC. 4034. APPLICATION OF SECONDARY PAYER PROVISIONS TO 
GOVERNMENTAL ENTITIES. 

(a) In General.— Section 1862(b)(4)(B)(i) of the Social Security Act 
(42 U.S.C. 1395y(b)(4)(B)(i)), as added by the amendment made by 
section 9319(a) of the Omnibus Budget Reconciliation Act of 1986, is 
amended by striking "section 5000(b) of the Internal Revenue Code 
of 1986" and inserting "subsection (b) of section 5000 of the Internal 
Revenue Code of 1986 without regard to subsection (d) of such 
section". 

(b) Effective Date. — The amendment made by subsection (a) 
shall be effective as if included in the enactment of section 9319(a) of 
the Omnibus Budget Reconciliation Act of 1986. 



42 USC 1395y 
note. 



SEC. 4035. PUBLICATION AND NOTIFICATION OF POLICIES. 

(a) Requiring Pubucation of Intermediary and Carrier 
BuDGrr Methodology.— 



Federal 

Register, 

publication. 



101 STAT. 1330-78 PUBLIC LAW 100-203— DEC. 22, 1987 

(1) Section 1816(cXl) of the Social Security Act (42 U.S.C. 
1395h(c)(l)) is amended by adding at the end the following 
sentence: "The Secretary shall cause to have published in the 
Federal Register, by not later than September 1 before each 
fiscal year, data, standards, and methodology to be used to 
establish budgets for fiscal intermediaries under this section for 
that fiscal year, and shall cause to be published in the Federal 
Register for public comment, at least 90 days before such data, 
standards, and methodology are published, the data, standards, 
and methodology proposed to be used.". 

(2) Section 1842(c)(1) of such Act (42 U.S.C. 1395u(c)(l)) is 
amended by adding at the end the following sentence: "The 
Secretary shall cause to have published in the Federal Register, 
by not later than September 1 before each fiscal year, data, 
standards, and methodology to be used to establish budgets for 
carriers under this section for that fiscal year, and shall cause 
to be published in the Federal Register for public comment, at 
least 90 days before such data, standards, and methodology are 
published, the data, standards, and methodology proposed to be 
used.". 

Effective date. (3) The amendments made by this section shall take effect on 

42 use I395h the date of the enactment of this Act and shall apply to budgets 

for fiscal years beginning with fiscal year 1989. 

Ob) PUBUCATION AS REGULATIONS OF SIGNIFICANT PoUCIES.~SeC- 

tion 1871(a) of such Act (42 U.S.C. 1395hh(a)) is amended— 

(1) by inserting "(1)" after "(a)"; and 

(2) by adding at the end the following new paragraph: 

"(2) No rule, requirement, or other statement of policy (other than 
a national coverage determination) that establishes or changes a 
substantive legal standard governing the scope of benefits, the 
payment for services, or the eligibility of individuals, entities, or 
organizations to furnish or receive services or benefits under this 
title shall take effect unless it is promulgated by the Secretary by 
regulation under paragraph (1).". 

(c) Miscellaneous Pubucation and Information Access Provi- 
sions.— Section 1871 of such Act (42 U.S.C. 1395hh) is amended by 
adding at the end the following new subsection: 

"(c)(1) The Secretary shall publish in the Federal Register, not less 
frequently than every 3 months, a list of all manual instructions, 
interpretative rules, statements of policy, and guidelines of general 
applicability which — 

"(A) are promulgated to carry out this title, but 
"(B) are not published pursuant to subsection (a)(1) and have 
not been previously published in a list under this subsection. 
Effective date. "(2) Effective June 1, 1988, each fiscal intermediary and carrier 

administering claims for extended care, post-hospital extended care, 
home health care, and durable medical equipment benefits under 
this title shall make available to the public all interpretative mate- 
rials, guidelines, and clarifications of policies which relate to pay- 
ments for such benefits. 
7 "(3) The Secretary shall to the extent feasible make such changes 
in automated data collection and retrieval by the Secretary and 
- fiscal intermediaries with agreements under section 1816 as are 
necessary to make easily accessible for the Secretary and other 
appropriate parties a data base which fairly and accurately reflects 
,i the provision of extended care, post-hospital extended care and 
home health care benefits pursuant to this title, including such 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-79 



categories as benefit denials, results of appeals, and other relevant 
I factors, and selectable by such categories and by fiscal intermediary, 
service provider, and region.". 

. SEC. 4036. END STAGE RENAL DISEASE AMENDMENTS. 

I (a) Implementation of Primary Payer Requirements for End- 
Stage Renal Disease Program. — 

(1) Section 1862(b)(2)(A) of the Social Security Act (42 U.S.C. 
1395y(b)(2)(A)) is amended by striking "(ii)" and all that follows 
through "under this title" and inserting "(ii) can reasonably be 
expected to be made under such a plan". 

(2) The amendment made by paragraph (1) shall apply with 
respect to items and services furnished on or after 30 days after 
the date of the enactment of this Act. 

(b) Limitation of Minimum Utilization Rate Requirement for 
' End-Stage Renal Disease Transplantations.— The last sentence 
ii of section 1881(b)(1) of such Act (42 U.S.C. 1395rr(b)(l)) is amended 
I by striking "covered procedures and for self-dialysis training pro- 
I grams" and inserting "transplantations". 

i (c) Extension of Deadline for Establishing Protocols on 
I Reuse of Dialysis Filters and Other Dialysis Supplies as It 

Relates to the Reuse of Bloodunes.— 
(! (IXA) Section 9335(k)(2) of the Omnibus Budget Reconciliation 

Act of 1986 is amended by inserting "(or July 1, 1988, with 
respect to protocols that relate to the reuse of bloodlines)" after 
"October 1, 1987". 

(B) The amendment made by subparagraph (A) shall be effec- 
tive as if included in the enactment of section 9335(k)(2) of the 
Omnibus Budget Reconciliation Act of 1986. 

(2) Section 1881(f)(7)(B) of the Social Security Act (42 U.S.C. 
1395rr(f)(7)(B)) is amended by inserting "(or July 1, 1988, with 
respect to protocols that relate to the reuse of bloodlines)" after 
"January 1, 1988". 
(d) Studies of End-Stage Renal Disease Program.— 

(1) The Secretary of Health and Human Services (in this 
subsection referred to as the "Secretary") shall arrange for a 
study of the end-stage renal disease program within the medi- 
care program. 

(2) Among other items, the study shall address — 

(A) access to treatment by both individuals eligible for 
medicare benefits and those not eligible for such benefits; 

(B) the quality of care provided to end-stage renal disease 
beneficiaries, as measured by clinical indicators, functional 
status of patients, and patient satisfaction; 

(C) the effect of reimbursement on quality of treatment; 

(D) major epidemiological and demographic changes in 
the end-stage renal disease population that may affect 
access to treatment, the quality of care, or the resource 
requirements of the program; and 

(E) the adequacy of existing data systems to monitor 
these matters on a continuing basis. 

(3) The Secretary shall submit to Congress, not later than 3 
years after the date of the enactment of this Act, a report on the 
study. 

(4) The Secretary shall request the National Academy of 
Sciences, acting through the Institute of Medicine, to submit an 
application to conduct the study described in this section. If the 



Effective date. 
42 use 1395y 
note. 



42 use 1395rr 
note. 



42 use 1395rr 
note. 



42 use 1395rr 
note. 



Reports. 



101 STAT. 1330-80 PUBLIC LAW 100-203— DEC. 22, 1987 



Academy submits an acceptable application, the Secretary shall 
enter into an appropriate arrangement with the Academy for , 
the conduct of the study. If the Academy does not submit an 
acceptable application to conduct the study, the Secretary may 
request one or more appropriate nonprofit private entities to 
submit an application to conduct the study and may enter into 
an appropriate arrangement for the conduct of the study by the 
entity which submits the best acceptable application. 
- (5) Section 1881 of the Social Security Act (42 U.S.C. 1395rr) is 
amended — 

(A) in subsection (c)(2)(F), by striking "and subsection (g)", 
■ (B) by striking the last sentence of subsection (c)(6), 

(C) by striking subsection (g), and 

(D) by redesignating subsection (h), as added by section 20 
of the Medicare and Medicaid Patient and Program Protec- 
tion Act of 1987 (Public Law 100-93), as subsection (g). 

SEC. 4037. MEDICARE HEARINGS AND APPEALS. 

(a) Maintaining Current System for Hearings and Appeals.— 
Any hearing conducted under section 1869(b)(1) of the Social Secu- 
rity Act prior to the earliest of the date on which the Secretary of 
Health and Human Services submits the report required to be 
submitted by the Secretary under subsection (b)(1) or September 1 i 
shall be conducted by Administrative Law Judges of the Office of I 
Hearings and Appeals of the Social Security Administration in the 
same manner as are hearings conducted under section 205(b)(1) of 
such Act. 

(b) Study and Report on Use of Telephone Hearings.— 

(1) The Secretary of Health and Human Services and the 
Comptroller General of the United States shall each conduct a 
study on holding hearings under section 1869(b)(1) of the Social 
Security Act by telephone and shall each report the results of 
the study not later than 6 months after the date of enactment of 
this Act. 

(2) The studies under paragraph (1) shall focus on whether 
telephone hearings allow for a full and fair evidentiary hearing, 
in general, or with respect to any particular category of claims 
and shall examine the possible improvements to the hearing 
process (such as cost-effectiveness, convenience to the claimant, 
and reduction in time under the process) resulting from the use 
of such hearings as compared to the adoption of other changes 
to the process (such as expansions in staff and resources). 

42 use 1395WW SEC, 4038. RURAL HEALTH MEDICAL EDUCATION DEMONSTRATION 
note. PROJECT. 

(a) In General. — The Secretary of Health and Human Services (in 
this section referred to as the ''Secretary") shall enter into agree- 
ments with four sponsoring hospitals submitting applications under 
this subsection to conduct demonstration projects to assist resident 
physicians in developing field clinical experience in rural areas. 

(b) Nature of Project. — Under a demonstration project con- 
ducted under subsection (a), a sponsoring hospital entering into an 
agreement with the Secretary under such subsection shall enter into 
arrangements with a small rural hospital to provide to such rural 
hospital, for a period of one to three months of training, physicians 
(in such number as the agreement under subsection (a) may provide) 
who have completed one year of residency training. 



42 use 1395ff 
note. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-81 



(c) Selection. — In selecting from among applications submitted 
under subsection (a), the Secretary shall ensure that four small 
rural hospitals located in different counties participate in the dem- 
onstration project and that — 

(1) two of such hospitals are located in rural counties of more 
than 2,700 square miles (one of which is east of the Mississippi 
River and one of which is west of such river); and 

(2) two of such hospitals are located in rural counties with (as 
determined by the Secretary) a severe shortage of physicians 
(one of which is east of the Mississippi River and one of which is 
west of such river). 

(d) Clarification of Payment. — For purposes of section 1886 of 
the Social Security Act — 

(1) with respect to subsection (d)(5)(B) of such section, any 
resident physician participating in the project under subsection 
(a) for any part of a year shall be treated as if he or she were 
working at the appropriate sponsoring hospital with an agree- 
ment under subsection (a) on September 1 of such year (and 
shall not be treated as if working at the small rural hospital); 
and 

(2) with respect to subsection (h) of such section, the payment 
amount permitted under such subsection for a sponsoring hos- 
pital with an agreement under subsection (a) shall be increased 
(for the duration of the project only) by an amount equal to the 
amount of any direct graduate medical education costs (as 
defined in paragraph (5) of such subsection (h)) incurred by such 
hospital in supervising the education and training activities 
under a project under subsection (a). 

^ (e) Duration of Project. — Each demonstration project under 
;i subsection (a) shall be commenced not later than six months after 
1 the date of enactment of this Act and shall be conducted for a period 
|| of three years. 

(0 Definition. — In this section, the term "sponsoring hospital" 
means a hospital that receives payments under sections 1886(d)(5)(B) 
and 1886(h) of the Social Security Act. 

ij SEC. 40.39. MISCELLANEOUS AND TECHNICAL PROVISIONS. 

i (a) Clarification of Criminal Penalties for Willful Misrepre- 
sentations.— Subsection (c) of section 1128B of the Social Security 
Act (42 U.S.C. 1320a-7(b)),28 as redesignated by section 4(d) of the 
Medicare and Medicaid Patient and Program Protection Act of 1987 
(Public Law 100-93), is amended— 42 USC 

(1) by striking "institution or facility" each place it appears I320a-7b. 

I and inserting "institution, facility, or entity", and 

I (2) by inserting "(including an eligible organization under 

; I section 1876(b))" after "other entity". 

j (b) Podiatrists. — 

I (1) Section 1861(r)(3) of the Social Security Act (42 U.S.C. 

1395x(r)(3)) is amended— 

(A) by striking "subsection (s) of this section" and insert- 
' ing "subsections (k), (m), (p)(l), and (s) of this section and 

sections 1814(a), 1832(a)(2)(F)(ii), and 1835", and 
I (B) by striking "; and for the purposes" and all that 

follows through "which he is legally authorized to per- 
form". 



'"•Copy read "1320a-7b))," 



101 STAT. 1330-82 PUBLIC LAW 100-203— DEC. 22, 1987 



EJfffective date. 
42 use 1395y 
note. 

42 use 1395WW 
note. 



42 use 1395x 
note. 



Federal 
Register, 
publication. 
42 use 1395x 
note. 



(2) Section 1861(b)(6) of such Act (42 U.S.C. 1395x(b)(6)) is 
amended by striking "Council on Podiatry Education of the 
American Podiatry Association" and inserting "Council on 
Podiatric Medical Education of the American Podiatric Medical 
Association". 

(c) Recovery of Payments for Certain Pacemaker Devices. — 

(1) Section 1862(h) of such Act (42 U.S.C. 1395y(h)) is 
amended — 

(A) in paragraph (1)(B), by striking "law," and inserting 
"law (and any amount paid to a provider under any such 
warranty),"; 

(B) in paragraph (1)(D), by striking "(3)," and inserting 
"(3), in determining the amount subject to repayment under 
paragraph (2)(C),"; 

(C) in paragraph (2) — 

(i) by striking "and" at the end of subparagraph (A), 

(ii) by striking the period at the end of subparagraph 
(B) and inserting ", and", and 

(iii) by adding at the end the following new subpara- 
graph: 

"(C) to make repayment to the Secretary of amounts paid 
under this title to the provider with respect to any cardiac 
pacemaker device or lead which has been replaced by the 
manufacturer, or for which the manufacturer has made pay- 
ment to the provider, under an express or implied warranty."; 
and 

(D) in paragraph (4)(B) — 

(i) by striking "or has" and inserting ", has", and 

(ii) by striking "(2)(B)," and inserting "(2)(B), or has 
c failed to make repayment to the Secretary as required 

under paragraph (2)(C),". 

(2) The amendments made by paragraph (1) shall become 
effective on January 1, 1988. 

(d) Extend and Clarify Prohibition on Cost Savings Poucies 
Before Beginning of Fiscal Year. — Notwithstanding any other 
provision of law, except as required to implement specific provisions 
required under statute, the Secretary of Health and Human Serv- 
ices is not authorized to issue in final form, after the date of the 
enactment of this Act and before October 15, 1988, any regulation, 
instruction, or other policy which is estimated by the Secretary to 
result in a net reduction in expenditures under title XVIII of the 
Social Security Act in fiscal year 1989 of more than $50,000,000. 

(e) Moratorium on Prior Authorization for Home Health and 
Post-Hospital Extended Care Services. — The Secretary of Health 
and Human Services shall not implement any voluntary or manda- 
tory program of prior authorization for home health services, ex- 
tended care services, or post-hospital extended care services under 
part A or B of title XVIII of the Social Security Act at any time 
prior to six months after the date on which the Congress receives 
the report required under section 9305(k)(4) of the Omnibus Budget 
Reconciliation Act of 1986. 

(f) Delay in Pubushing Regulations with Respect to Deeming 
the Status of Entities. — The Secretary of Health and Human 
Services (in this subsection referred to as the "Secretary") shall not 
deem any entity to be a provider of services (as defined in section 
1861(u) of the Social Security Act) for purposes of title XVIII of such 
Act— 



PUBLIC LAW 100-203— DEC, 22, 1987 101 STAT. 1330-83 



(1) on any date prior to 6 months after the date on which the 
Secretary has published a proposed rule with respect to the 
deeming of the entity, and 

(2) until the Secretary publishes a final rule with respect to 
the deeming of the entity. 

(g) Use of Interim Final Regulations.— The Secretary of Health 
and Human Services shall issue such regulations (on an interim or 
other basis) as may be necessary to implement this subtitle and the 
amendments made by this subtitle. 

PART 3— RELATING TO PART B 

Subpart A — Provisions Relating to Payments for 
Physicians' Services 



42 use 1395hh 
note. 



SEC. 4041. FREEZE IN PAYMENTS FOR PHYSICIANS' SERVICES; EXTEN- 
SION OF SEQUESTER ORDER. 

(a) Three-Month Freeze on Increases in Physician Pay- 
ments.— 

(1) In general. — Section 1842 of the Social Security Act (42 
U.S.C. 1395u) is amended— 

(A) in subsection (b)(4) — 

(i) in subparagraph (A), by redesignating clause (v) as 
clause (vi) and by inserting after clause (iv) the follow- 
ing new clause: 

"(v) In determining the prevailing charge levels under the third 
and fourth sentences of paragraph (3) for physicians' services fur- 
nished during the 3-month period beginning January 1, 1988, the 
Secretary shall not set any level higher than the same level as was 
set for the 12-month period beginning January 1, 1987.", and 

(ii) in subparagraph (B), by adding at the end the 
following new clause: 

"(iii) In determining the reasonable charge under paragraph (3) 
for physicians' services furnished during the 3-month period begin- 
ning January 1, 1988, the customary charges shall be the same 
customary charges £is were recognized under this section for the 12- 
month period beginning January 1, 1987."; and 

(B) in subsection (j)(l)(C), by adding at the end thereof the 
following new clause: 

"(vii) Notwithstanding any other provision of this subparagraph, 
the msu^imum allowable actual charge for a particular physician's 
service furnished by a nonparticipating physician to individuals 
enrolled under this part during the 3-month period beginning on 
January 1, 1988, shall be the amount determined under this 
subparagraph for 1987. The maximum allowable actual charge for 
any such service otherwise determined under this subparagraph for 
1988 shall take effect on April 1, 1988.". 

(2) Extension of physician participation agreements and 
related provisions. — Notwithstanding any other provision of 
law — 

(A) subject to the last sentence of this paragraph, each 
agreement with a participating physician in effect on 
December 31, 1987, under section 1842(hXl) of the Social 
Security Act shall remain in effect for the 3-month period 
beginning on January 1, 1988; 



Effective date. 



42 use 1395u 
note. 



101 STAT. 1330-84 



PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1395u 
notes. 

42 use 1395u 
note. 

42 use 1395u 
note. 



President of U.S. 
2 use 902 note. 



(B) the effective period for agreements under such section 
entered into for 1988 shall be the nine-month period begin- 
ning on April 1, 1988, and the Secretary shall provide an 
opportunity for physicians to enroll as participating physi- 
cians prior to April 1, 1988; 

(C) instead of publishing, under section 1842(hX4) of the 
Social Security Act at the beginning of 1988, directories of 
participating physicians for 1988, the Secretary shall pro- 
vide for such publication, at the beginning of the 9-month 
period beginning on April 1, 1988, of such directories of 
participating physicians for such period; and 

(D) instead of providing to nonparticipating physicians, 
under section 1842(b)(3)(G) of the Social Security Act at the 
beginning of 1988, a list of maximum allowable actual 
charges for 1988, the Secretary shall provide, at the begin- 
ning of the 9-month period beginning on April 1, 1988, to 
such physicians such a list for such 9-month period. 

An agreement with a participating physician in effect on 
December 31, 1987, under section 1842(h)(1) of the Social Secu- 
rity Act shall not remain in effect for the period described in 
subparagraph (A) if the participating physician requests on or 
before December 31, 1987, that the agreement be terminated. 

(3)(A) Section 1842 of the Social Security Act (42 U.S.C. 1395u) 
is amended — 

(i) in subsection (b)(2), by adding at the end the following: 
"In establishing such standards and criteria, the Secretary 
shall provide a system to measure a carrier's performance 
of responsibilities described in paragraph (3)(H) and subsec- 
tion (h)."; and 

(ii) in subsection (c)(1), by inserting "(A)" after "(c)(1)" and 
by adding at the end the following new subparagraph: 

"(B) Of the amounts appropriated for administrative activities to 
carry out this part, the Secretary shall provide payments, totaling 1 
percent of the total payments to carriers for claims processing in 
any fiscal year, to carriers under this section, to reward carriers for 
their success in increasing the proportion of physicians in the 
carrier's service area who are participating physicians or in increas- 
ing the proportion of total payments for physicians' services which 
are payments for such services rendered by participating physi- 
cians.". 

(B) Section 9332(a) of the Omnibus Budget Reconciliation Act 
of 1986 is amended — 

(i) by striking paragraphs (2) and (3), 

(ii) in paragraph (4)(B), by striking "under paragraph (2)" 
and inserting "under the last sentence of section 1842(b)(2) 
of the Social Security Act", and 

(iii) in paragraph (4)(C)— 

(I) by striking "under paragraph (3)" and inserting 
"under section 1842(c)(1)(B) of the Social Security Act", 

(II) by striking "April" and inserting "July", and 

(III) by striking "at the end of 1987" and inserting 
"before April 1, 1988". 

(b) Extension of Reduction Under Sequester Order.— Notwith- 
standing any other provision of law (including any other provision of 
this Act), the reductions in the amount of payments required under 
title XVIII of the Social Security Act made by the final sequester 
order issued by the President on November 20, 1987, pursuant to 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-85 



section 252(b) of the Balanced Budget Emergency Deficit Control Act 
of 1985 shall continue to be effective (as provided by sections 
252(a)(4)(B) and 256(d)(2) of such Act) through March 31, 1988, with 
respect to payments for physicians' services under part B of such 
title. 

SEC. 4042. GENERAL UPDATE IN PAYMENTS FOR PHYSICIANS' SERVICES. 

(a) Increase in MEI for 1988 and 1989.— Section 1842(b)(4) of the 
Social Security Act (42 U.S.C. 1395u(b)(4)) is amended by adding at 
the end the following new subparagraph: 

"(F)(i) For purposes of this part for physicians' services furnished 
in 1987, the percentage increase in the MEI is 3.2 percent. 

"(ii) For purposes of this part for physicians' services furnished in 

1988, on or after April 1, the percentage increase in the MEI is — 
"(I) 3.6 percent for primary care services (as defined in 

subparagraph (E)(iii)), and 

"(II) 1 percent for other physicians' services, 
"(iii) For purposes of this part for physicians' services furnished in 

1989, the percentage increase in the MEI is — 

"(I) 3.0 percent for primary care services; and 
"(II) 1 percent for other physician's services.". 

(b) Primary Care Services Defined. — Section 1842(b)(4)(E) of such 
Act (42 U.S.C. 1395u(b)(4)(E)) is amended by adding at the end 
thereof the following new clause: 

"(iii) The term 'primary care services' means physicians' 
services which constitute office medical services, emergency 
department services, home medical services, skilled nursing, 
intermediate care, and long-term care medical services, or nurs- 
ing home, boarding home, domiciliary, or custodial care medical 
services.". 

(c) Participating Physician Differential.— Section 
1842(b)(4)(A)(iv) of such Act (42 U.S.C. 1395u(b)(4)(A)(iv)) is 
amended — 

(1) by striking "96 percent" and inserting "applicable per- 
cent", and 

(2) by adding at the end the following: "In the previous 
sentence, the term 'applicable percent' means for services fur- 
nished (I) on or after January 1, 1987, and before April 1, 1988, 
96 percent, (II) on or after April 1, 1988, and before January 1, 
1988, 95.5 percent, and (III) on or after January 1, 1989, 95 
percent.". 

SEC. 4043. incentive PAYMENTS FOR PHYSICIANS' SERVICES FUR- 
NISHED IN UNDERSERVED AREAS. 

(a) In General.— Section 1833 of the Social Security Act (42 U.S.C. 
13951) is amended by adding at the end the following new subsection: 

"(m) In the case of physicians' services furnished to an individual, 
who is covered under the insurance program established by this part 
and who incurs expenses for such services, in an area that is 
designated (under section 332(a)(1)(A) of the Public Health Service 
Act) as a class 1 or class 2 health manpower shortage area, in 
addition to the amount otherwise paid under this part, there also 
shall be paid to the physician (or to an employer or facility in the 
cases described in clause (A) of section 1842(b)(6)) (on a monthly or 
quarterly basis) from the Federal Supplementary Medical Insurance 
Trust Fund an amount equal to 5 percent of the payment amount 
for the service under this part.". 



101 STAT. 1330-86 PUBLIC LAW 100-203— DEC. 22, 1987 



Reports. 

42 use 1395/ 

note. 



42 use 1395/ 
note. 



42 use 1395u 
note. 



(b) Study.— The Secretary of Health and Human Services shall 
study and report to Congress, by not later than January 1, 1990, on 
the feasibility of making additional payments described in section 
1833(m) of the Social Security Act with respect to physician services 
which are performed in health manpower shortage areas located in 
urban areas. 

(c) Effective Date. — The amendments made by this subsection (a) 
shall apply with respect to services furnished in a rural area (as 
defined in section 1886(d)(2)(D) of the Social Security Act) on or 
after January 1, 1989, and to other services furnished on or after 
January 1, 1991. 

SEC. 4044. ADJUSTMENT IN PREVAILING CHARGE LEVEL FOR PRIMARY 
CARE SERVICES. 

(a) Increase in Prevailing Charges for Primary Care Serv- 
ices.— Section 1842(b)(4)(A) of the Social Security Act (42 U.S.C. 
1395u(b)(4)(A)), as amended by section 4041(a)(1) of this subtitle, is 
further amended by redesignating clause (vi) as clause (vii) and by 
inserting after clause (v) the following new clause: 

"(vi) Before each year (beginning with 1989), the Secretary shall 
establish a prevailing charge floor for primary care services (as 
defined in subparagraph (E)(iii)) equal to 50 percent of the average of 
the prevailing charge levels (determined, for participating physi- 
cians under the third and fourth sentences of paragraph (3) and 
under paragraph (4), without regard to this clause and without 
regard to physician specialty) for such service for all localities in the 
United States (weighted by the relative frequency of the service in 
each locality) for the year.". 

(b) Effective Date. — The amendments made by subsection (a) 
shall apply to payment for physicians' services furnished on or after 
January 1, 1989. 

SEC. 4045. REDUCTION IN PREVAILING CHARGE LEVEL FOR OVERPRICED 
PROCEDURES. 

(a) In General. — Paragraph (10) of section 1842(b) of the Social 
Security Act (42 U.S.C. 1395u(b)) is amended to read as follows: 
"(10)(A)(i) In determining the regisonable charge under paragraph 
(3) for procedures described in subparagraph (C) and performed 
during the 9-month period beginning on April 1, 1988, the prevailing 
charge for such procedure for participating and nonparticipating 
physicians shall be the prevailing charge otherwise recognized for 
such procedure for 1987 — 

"(I) subject to clause (iii), reduced by 2.0 percent, and 
"(II) further reduced by the applicable percentage specified in 
clause (ii). 

"(ii) For purposes of clause (i), the applicable percentage specified 
in this clause is — 

"(I) 15 percent, in the case of a prevailing charge otherwise 
recognized (without regard to this paragraph and determined 
without regard to physician specialty) that is at least 150 per- 
cent of the weighted national average (as determined by the 
Secretary) of such prevailing charges for such procedure for all 
localities in the United States for 1987; 

"(II) 0 percent, in the case of a prevailing charge that does not 
exceed 85 percent of such weighted national average; and 



Copy read "Act))". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-87 

"(in) in the case of any other prevailing charge, a percent 
determined on the basis of a straight-line sliding scale, equal to 
^1 3 of a percentage point for each percent by which the prevail- 
ing charge exceeds 85 percent of such weighted national 
average. 

"(iii) In no case shall the reduction under clause (i) for a procedure 
result in a prevailing charge in a locality for 1988 which is less than 
85 percent of the Secretary's estimate of the weighted national 
average of such prevailing charges for such procedure for all local- 
ities in the United States for 1987 (based upon the best available 
data and determined without regard to physician specialty) after 
making the reduction described in clause (i)(II). 

"(B) The procedures described in this subparagraph are as follows: 
bronchoscopy, 2^ carpal tunnel repair, cataract surgery, coronary 
artery bypass surgery, diagnostic and/or therapeutic dilation and 
curettage, knee arthroscopy, knee arthroplasty, pacemaker 
implantation surgery, total hip replacement, suprapubic prostatec- 
tomy, transurethral resection of the prostate, and upper gastro- 
intestinal endoscopy. 

"(C) In the case of a reduction in the reasonable charge for a 
physicians' service under subparagraph (A), if a nonparticipating 
physician furnishes the service to an individual entitled to benefits 
under this part, after the effective date of such reduction, the 
physician's actual charge is subject to a limit under subsection 
(jXlXD). 

"(D) There shall be no administrative or judicial review section 
1869 or otherwise of any determination under subparagraph (A) or 
under paragraph (ll)(B)(ii).". 

(b) Modification of Geographic Index.— Section 1845(e)(4XA)(i) 
of such Act (42 U.S.C. 1395w-l(eX4XAXi)) is amended by inserting 
"and costs of living" after "costs of practice". 

(C) CONSOUDATED CHARGE LIMITATION PROVISIONS.— 

(1) Penalties for excess charges.— Section 1842 of such Act 
is further amended— 

(A) in subsection (bXllXC)— 

(i) in clause (i), by striking "(subject to clause (iv))" 
and all that follows through the end and inserting the 
following: ", the physician's actual charge is subject to 
a limit under subsection (jXlXD)."; 

(ii) in clause (i), by striking "(i)" after "(C)"; and 

(iii) by striking clauses (ii) through (iv); and 

(B) in subsection (jXD, by adding at the end the following 
new subparagraph: 

"(DXi) If an action described in clause (ii) results in a reduction in 
a reasonable charge for a physicians' service or item and a 
nonparticipating physician furnishes the service or item to an 
individual entitled to benefits under this part after the effective date 
of such action, the physician may not charge the individual more 
than 125 percent of the reduced pa)mient allowance (as defined in 
clause (iii)) plus (for services or items furnished during the 12-month 
period (or 9-month period in the case of an action described in clause 
(iiXID) beginning on the effective date of the action) Vt. of the amount 
by which the physician's maximum allowable actual charge for the 
service or item for the previous 12-month period exceeds such 125 
percent level. 

"(ii) The first sentence of clause (i) shall apply to — 



^ Copy read "bronschoscopv,". 
^ Copy read "under under' . 



101 STAT. 1330-88 PUBLIC LAW 100-203— DEC. 22, 1987 



"(I) an adjustment under subsection (b)(8)(B) (relating to 
inherent reasonableness), 

''(II) a reduction under subsection (b)(10)(A) (relating to cer- 
tain overpriced procedures), 

"(III) a reduction under subsection (b)(ll)(B) (relating to cer- 
tain cataract procedures), and 

"(IV) an adjustment under section 1833(1)(3)(B) (relating to 
physician supervision of certified registered nurse anesthetists), 
"(iii) In clause (i), the term 'reduced payment allowance' means, 
with respect to an action — 

"(I) under subsection (b)(8)(B), the inherently reasonable 
charge established under subsection (b)(8); or 

"(II) under subsection (b)(10)(A) or (b)(ll)(B) or under section 
1833(1)(3)(B), the prevailing charge for the service after the 
action, 

"(iv) If a physician knowingly and willfully imposes a charge in 
violation of clause (i) (whether or not such charge violates subpara- 
graph (B)), the Secretary may apply sanctions against such physi- 
cian in accordance with paragraph (2). 

"(v) Clause (i) shall not apply to items and services furnished after 
the earlier of (I) December 31, 1990, or (II) one-year after the date 
the Secretary reports to Congress, under section 1845(e)(3), on the 
development of the relative value scale under section 1845.". 

(2) Conforming amendments.— (A) Section 1833(1)(6) of such 
Act (42 U.S.C. 1395i(l)(6)) is amended— 

(i) in subparagraph (A), by striking "(subject to subpara- 
graph (D))" and all that follows through the end and insert- 
ing the following: "after the effective date of the reduction, 
the physician's actual charge is subject to a limit under 
section 1842(j)(l)(D)."; 

(ii) in subparagraph (A), by striking "(A)" after "(6)"; and 

(iii) by striking subparagraphs (B) through (D). 

(B) Section 1842(b)(ll)(B)(i) of such Act (42 U.S.C. 
1395u(b)(ll)(B)(i)) is amended by striking "and shall be further 
reduced" and all that follows through "1988". 

(C) Section 9334(b)(2) of the Omnibus Budget Reconciliation 
42 use I395u Act of 1986 is amended by striking "1842(b)(10)" and inserting 
note. "1842(j)(l)(D)". 

42 use I395u (d) EFFECTIVE Date. — The amendments made by this section shall 
note. apply to items and services furnished on or after April 1, 1988, 

except the amendment made by subsection (c)(2)(B) shall apply to 

services furnished on or after January 1, 1988. 

SEC. 4046. LIMITS ON PAYMENT FOR OPHTHALMIC ULTRASOUND. 

(a) In General.— Section 1842 of the Social Security Act (42 U.S.C 
1395u), as previously amended by this subpart is amended — 
(Din subsection (b)( 11)— 

(A) in subparagraph (C), as redesignated under section 
4045(c)(l)(A)(ii) of this title, by inserting "or (C)" after 
"subparagraph (B)"; 

(B) by redesignating subparagraph (C) as subparagraph 
(D); and 

(C) by inserting after subparagraph (B) the following new 
subparagraph: 

"(C) The prevailing charge level determined with respect to A- 
mode ophthalmic ultrasound procedures may not exceed 5 percent 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-89 



of the prevailing charge level established with respect to extra- 
capsular cataract removal with lens implantation."; and 

(2) in subparagraph (D) of subsection (j)(l), as added by section 
4045(c)(1)(B) of this subtitle— 

(A) in clause (ii), by striking "and" at the end of subclause 
(III), by redesignating subclause (IV) as subclause (V) and 
by inserting before such subclause the following new 
subclause: 

"(IV) a prevailing charge limit is established under subsection 
(b)(ll)(C)(i), and"; and 

(B) in clause (iii)(II), by striking "or (b)(ll)(B)" and insert- 
ing ", (b)(ll)(B), or (b)(ll)(C)(i)". 

(b) Effective Date.— The amendments made by subsection (a) 42 USC I395u 
shall apply to services furnished on or after April 1, 1988. note. 

SEC. 4047. CUSTOMARY CHARGES FOR PRIMARY CARE SERVICES OF NEW 
PHYSICIANS. 

(a) In General. — Section 1842(b)(4) of the Social Security Act, as 
amended by section 4042(a), is further amended by adding at the end 
thereof the following new subparagraph: 

"(G) In determining the customary charges for physicians' serv- 
j ices (other primary care services and other than services furnished 
i| in a rural area (as defined in section 1886(d)(2)(D)) that is designated, 
j under section 332(a)(1)(A) of the Public Health Service Act, as a 
j health manpower shortage area) for which adequate actual charge 
j data are not available because a physician has not yet been in 
\ practice for a sufficient period of time, the Secretary shall set a 
'I customary charge at a level no higher than 80 percent of the 
j prevailing charge (as determined under the third and fourth sen- 
tences of paragraph (3) and under paragraph (4)) for a service.". 

(h) Effective Date. — The amendment made by subsection (a) 42 USC I395u 
shall apply to physicians who first furnish services to medicare note, 
beneficiaries after April 1, 1988. 

SEC. 4048. PAYMENT FOR PHYSICIAN ANESTHESIA SERVICES. 

u (a) In General. — Section 1842(b) of the Social Security Act (42 
I'l' U.S.C. 1395u05)) is further amended by adding at the end the 
I following new paragraph: 

"(14)(A) In determining the reasonable charge under paragraph (3) 
of a physician for medical direction of two or more nurse anes- 
thetists performing, on or after April 1, 1988, and before January 1, 
1991, anesthesia services in whole or in part concurrently, the 
number of base units which may be recognized with respect to such 
medical direction for each concurrent procedure (other than cata- 
ract surgery or an iridectomy) shall be reduced by — 
j "(i) 10 percent, in the case of medical direction of 2 nurse 

I anesthetists concurrently, 

"(ii) 25 percent, in the case of medical direction of 3 nurse 
anesthetists concurrently, and 

"(iii) 40 percent, in the case of medical direction of 4 nurse 
anesthetists concurrently. 
"(B) In determining the reasonable charge under paragraph (3) of 
a physician for medical direction of two or more nurse anesthetists 
performing, on or after January 1, 1989, and before January 1, 1991, 
I anesthesia services in whole or in part concurrently, the number of 
base units which may be recognized with respect to such medical 

i 



101 STAT. 1330-90 



PUBLIC LAW 100-203— DEC. 22, 1987 



Regulations. 
42 use 1395u 
note. 



Reports. 

42 use 1395u 

note. 



42 use 1395u 
note. 



Reports. 



Reports. 



direction for each concurrent cataract surgery or iridectomy proce- 
dure shall be reduced by 10 percent. 

"(C) The Secretary shall require claims for physicians' services for 
medical direction of nurse anesthetists during the periods in which 
the provisions of subparagraph (A) or (B) apply to indicate the 
number of such anesthetists being medically directed concurrently 
at any time during the procedure, the name of each nurse anes- 
thetist being directed, and the type of procedure for which the 
services are provided.". 

(b) Development of Uniform Relative Value Guide.— The Sec- 
retary of Health and Human Services, in consultation with groups 
representing physicians who furnish anesthesia services, shall estab- 
lish by regulation a relative value guide for use in all carrier 
localities in making payment for physician anesthesia services fur- 
nished under part B of title XVIII of the Social Security Act on and 
after January 1, 1989. Such guide shall be designed so as to result in 
expenditures under such title for such services in an amount that 
would not exceed the amount of such expenditures which would 
otherwise occur. 

(c) Study of Prevailing Charges for Anesthesia Services.— 
The Secretary of Health and Human Services shall conduct a study 
of the variations in conversion factors used by carriers under section 
1842(b) of the Social Security Act to determine the prevailing charge 
for anesthesia services and shall report the results of the study and 
make recommendations for appropriate adjustments in such factors 
not later than January 1, 1989. 

(d) GAG Studies.— (1) The Comptroller General shall conduct a 
study — 

(A) to determine the average anesthesia times reported for 
medicare reimbursement purposes, 

(B) to verify those times from patient medical records, 

(C) to compare anesthesia times to average surgical times, and 

(D) to determine whether the current payments for physician 
supervision of nurse anesthetists are excessive. 

The Comptroller General shall report to Congress, by not later than 
January 1, 1989, on such study and in the report include rec- 
ommendations regarding the appropriateness of the anesthesia 
times recognized by medicare for reimbursement purposes and rec- 
ommendations regarding adjustments of payments for physician 
supervision of nurse anesthetists. 

(2) The Comptroller General shall conduct a study on the impact 
of the amendment made by subsection (a), and shall report to 
Congress on the results of such study by April 1, 1990. 

SEC. 4049. FEE SCHEDULES FOR RADIOLOGIST SERVICES. 

(a) In General. — Part B of title XVIII of the Social Security Act is 
amended — 

(1) in section 1833(aXl) (42 U.S.C. 13951(a)(1)), as amended by 
section 4062(c)(3) of this subtitle by striking "and" before **(I)", 
and by adding at the end the following new clause: "and (J) with 
respect to expenses incurred for radiologist services (as defined 
in section 1834(b)(5)), the amounts paid shall be 80 percent of the 
lesser of the actual charge for the services or the amount 
provided under the fee schedule established under section 
1834(b),"; and 



PUBLIC LAW 100-203— DEC. 22, 1987 lOl STAT. 1330-91 



(2) by adding at the end of section 1834, as subsequently 
inserted by section 4062(a) of this subtitle, the following new 
subsection: 

"(b) Fee Schedules for Radiologist Services. — 42 USC 1395m. 

"(1) Development. — The Secretary shall develop — 

"(A) a relative value scale to serve as the basis for the 
payment for radiologist services under this part, and 

"(B) using such scale and appropriate conversion factors, 
fee schedules (on a regional, statewide, or carrier service 
area basis) for payment for radiologist services under this 
part, to be implemented for such services furnished during 
1989. 

"(2) Consultation. — In carrying out paragraph (1), the Sec- 
retary shall regularly consult closely with the Physician Pay- 
ment Review Commission, the American College of Radiology, 
and other organizations representing physicians or suppliers 
who furnish radiologist services and shall share with them the 
data and data analysis being used to make the determinations 
under paragraph (1), including data on variations in current 
medicare payments by geographic area, and by service and 
physician specialty. 

"(3) Considerations. — In developing the relative value scale 
and fee schedules under paragraph (1), the Secretary — 

"(A) shall take into consideration variations in the cost of 
furnishing such services among geographic areas and 
among different sites where services are furnished, and 
"(B) may also take into consideration such other factors 
respecting the manner in which physicians in different 
specialties furnish such services as may be appropriate to 
assure that payment amounts are equitable and designed to 
promote effective and efficient provision of radiologist serv- 
ices by physicians in the different specialties. 
"(4) Savings.— 

"(A) Budget neutral fee schedules. — The Secretary 
shall develop preliminary fee schedules for 1989, which are 
designed to result in the same amount of aggregate pay- 
ments (net of any insurance and deductibles under section 
1835(a)(l)(I) and 1833(b)) for radiologist services furnished in 
1989 as would have been made if this subsection had not 
been enacted. 

"(B) Initial savings. — The fee schedules established for 
payment purposes under this subsection for services fur- 
nished in 1989 shall be 97 percent of the amounts permitted 
under these preliminary fee schedules developed under 
subparagraph (A). 

"(C) Subsequent updating. — Radiologist services fur- 
nished in subsequent years, the fee schedules shall be the 
schedules for the previous year updated by the percentage 
increase in the MEI (as defined in section 1842(b)(4)(E)(ii)) 
for the year. 

"(D) 3 ^ Nonparticipating physicians.— Each fee sched- 
ule so established shall provide that the payment rate 



^° Copy read "this". 
3» Copy read " '(C)". 



101 STAT. 1330-92 PUBLIC LAW 100-203— DEC. 22, 1987 



recognized for nonparticipating physicians and suppliers is 
equal to the appropriate percent (as defined in section 
1842(b)(4)(AXiv)) of the payment rate recognized for partici- 
pating physicians and suppliers. 
"(5) Limiting charges of nonparticipating physicians. — 

"(A) In general. — In the case of radiologist services fur- 
nished after January 1, 1989, for which payment is made 
under a fee schedule under this subsection, if a 
nonparticipating physician or supplier furnishes the service 
to an individual entitled to benefits under this part, the 
physician or supplier may not charge the individual more 
than the limiting charge (as defined in subparagraph (B)). 

"(B) Limiting CHARGE DEFINED.— In subparagraph (A), the 
term 'limiting charge' means, with respect to a service 
furnished — 

"(i) in 1989, 125 percent of the amount specified for 
the service in the appropriate fee schedule established 
under paragraph (1), 

"(ii) in 1990, 120 percent of the amount specified for 
the service in the appropriate fee schedule established 
under paragraph (1), and 

"(iii) after 1990, 115 percent of the amount specified 
for the service in the appropriate fee schedule estab- 
lished under paragraph (1). 
"(C) Enforcement. — If a physician or supplier knowingly 
and willfully imposes a charge in violation of subparagraph 
(A), the Secretary may apply sanctions against such physi- 
cian or supplier in accordance with section 1842(j)(2). 
"(6) 3 2 Radiologist services defined.— For the purposes of 
this subsection, section 1833(a)(l)(I), and section 1842(h)(1)(B), 
the term 'radiologist services' only includes radiologic services 
performed by, or under the direction or supervision of, a 
physician — 

"(A) who is certified, or eligible to be certified, by the 
American Board of Radiology, or 

"(B) for whom radiologic services account for at least 50 
percent of billings made under this part.". 

Reports. (b) DEADLINES AND EFFECTIVE DaTE. — 

note^^ ^^^^"^ Secretary of Health and Human Services shall estab- 

lish the relative value scale and fee schedules for radiologist 
services (under section 1834(b) of the Social Security Act) by not 
later than August 1, 1988, and shall report to Congress on the 
development of such fee schedules not later than August 1, 
1988. 

(2) The amendments made by this section shall apply to 
services performed on or after January 1, 1989, and until such 
time as the Secretary of Health and Human Services imple- 
ments physician fee schedules based on the relative value scale 
developed under section 1845(e) of the Social Security Act. 

42 use 1395/ SEC. 4050. FEE SCHEDULES FOR PHYSICIAN PATHOLOGY SERVICES. 

(a) In General.— The Secretary of Health and Human Servipes 
shall develop — 



32 Copy read " '(5)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-93 

(1) a relative value scale to serve as the basis for the payment 
for physician pathology services under part B of title XVIII of 
the Social Security Act, 

(2) using such scale and appropriate conversion factors, pro- 
posed fee schedules (on a regional, statewide, or carrier service 
area basis) for payment for physician pathology services under 
such part, that could be implemented for such services fur- 
nished during 1990, and 

(3) an appropriate index to be applied to updating such fee 
schedules annually for physician pathology services furnished 
in years after 1990. 

(b) Consultation.— In carrying out subsection (a), the Secretary 
H shall regularly consult closely with the Physician Payment Review 
'•^ Commission, the College of American Pathologists, and other 

organizations representing physicians who furnish physician pathol- 
ogy services and shall share with them the data and data analysis 
ill being used to make the determinations under subsection (a), includ- 
' ing data on variations in current medicare payments by geographic 
area, and by service and physician specialty. 

(c) Consideration.— In developing the fee schedules under subsec- 
tion (a), the Secretary shall take into consideration variations in the 
cost of furnishing physician pathology services among geographic 
areas. 

(d) Report.— The Secretary shall report, not later than April 1, 
1989, to the Committees on Energy and Commerce and Ways and 
Means of the House of Representatives and the Committee on 
Finance of the Senate on the relative value scale, fee schedules, and 
the index developed under this section. Such report shall include 
recommendations on how to protect medicare beneficiaries against 

, excessive charges for physician pathology services above the pay- 
I i'' ment amounts established by the fee schedules. 

' SEC. 4051. ELIMINATION OF MARKUP FOR CERTAIN PURCHASED SERV- 
ICES. 

(a) In General.— Section 1842 of the Social Security Act (42 U.S.C. 42 use I395u. 
||| 1935u) is amended by adding at the end the following new subsec- 
I tion: 

"(n)(l) If a physician's bill or a request for payment for services 
H billed by a physician includes a charge to a patient for a diagnostic 
d test described in section 1861(s)(3) (other than a clinical diagnostic 
it 1 1 laboratory test) for which payment does not indicate that the billing 
e|| physician personally performed or supervised the performance of 
1^ , the test or that another physician with whom the physician who 
shares his practice personally performed or supervised the test, the 
■j^ i amount payable with respect to the test shall be determined as 
■li I follows: 

g. j "(A) If the bill or request for payment indicates that the test 

jj was performed by a supplier, identifies the supplier, and in- 
^ I dicates the amount the supplier charged the billing physician, 
payment for the test (less the applicable deductible and coinsur- 
I ance amounts) shall be the actual acquisition costs (net of any 

Jj discounts) or, if lower, the [ ] [ -] [ ] [ ] 

[ enrolled under [ ] [ ] [ ] [ ] 

I [ ].'^ 

I "(B) If the bill or request for payment (i) does not indicate who 

i performed the test, or (ii) indicates that the test was performed 
\ by a supplier but does not identify the supplier or include the 



Copy not legible. 



101 STAT. 1330-94 PUBLIC LAW 100-203— DEC. 22, 1987 

amount charged by the supplier, no payment shall be made 
under this part. 

"(2) A physician may not bill an individual enrolled under this 
part — 

"(A) any amount other than any applicable deductible and 
coinsurance for a diagnostic test for which payment is made 
pursuant to paragraph (1)(A), or 

"(B) any amount for a diagnostic test for which payment may 
not be made pursuant to paragraph (1)(B). 
"(3) If a physician knowingly and willfully in repeated cases bills 
one or more individuals in violation of paragraph (2), the Secretary 
may apply sanctions against such physician or supplier in accord- 
ance with section 1842(j)(2).". 

42 use 1395u. (b) ADJUSTMENT IN MEDICARE PREVAILING CHARGES.— 

(1) Review.— The Secretary of Health and Human Services 
shall review payment levels under part B of title XVIII of the 
Social Security Act for diagnostic tests (described in section 
1861(s)(3) of such Act, but excluding clinical diagnostic labora- 
tory tests) which are commonly performed by independent li 
suppliers, sold as a service to physicians, and billed by such 
physicians, in order to determine the reasonableness of pay- 
ment amounts for such tests (and for associated professional 
services component of such tests). The Secretary may require 
physicians and suppliers to provide such information on the 
purchase or sale price (net of any discounts) for such tests as is 
necessary to complete the review and make the adjustments 
under this subsection. The Secretary shall also review the 
reasonableness of payment levels for comparable in-office diag- 
nostic tests. 

(2) Estabushment of revised payment screens.— If, as a 
result of such review, the Secretary determines, after notice and 
opportunity of at least 60 days for public comment, that the i 
current prevailing charge levels (under the third and fourth j 
sentences of section 1842(b) of the Social Security Act) for any [ 
such tests or associated professional services are excessive, the 
Secretary shall establish such charge levels at levels which, 
consistent with £issuring that the test is widely and consistently 
available to medicare beneficiaries, reflect a reasonable price 

Contracts. for the test without any markup. Alternatively, the Secretary, 

pursuant to guidelines published after notice and opportunity of 
at least 60 days for public comment, may delegate to carriers 
with contracts under section 1842 of the Social Security Act the 
establishment of new prevailing charge levels under this para- 
graph. When such charge levels are established, the provisions [ 
of section 1842(j)(lXD) of such Act shall apply in the same 
manner as they apply to a reduction under section 1842(b)(8)(A) 
of such Act. 

42 use 1395u (c) EFFECTIVE DaTES.— 

note. (1) The amendment made by subsection (a) shall apply to 

diagnostic tests performed on or after April 1, 1988. 

(2) The Secretary of Health and Human Services shall com- 
plete the review and make an appropriate adjustment of 
prevailing charge levels under subsection (b) for items and 
services furnished no later than January 1, 1989. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-95 

SEC. 4052. COLLECTION OF PAST-DUE AMOUNTS OWED BY PHYSICIANS 

WHO BREACHED CONTRACTS UNDER THE NATIONAL HEALTH ^ 
SERVICE CORPS SCHOLARSHIP PROGRAiM. 

(a) In General.— Title XVIII of the Social Security Act, as pre- 
viously amended by this subtitle, is amended by adding at the end 
thereof the following new section: 

"offset of payments to PHYSICIANS TO COLLECT PAST-DUE OBLIGATIONS 42 USC 1395ccc. 
ARISING FROM BREACH OF SCHOLARSHIP CONTRACT 

"Sec. 1892. (a) In General.— 

"(1)(A) Subject to subparagraph (B), the Secretary shall enter 
into an agreement under this section with any physician who, 
by reason of a breach of a contract entered into by such 
physician pursuant to the National Health Service Corps Schol- 
arship Program, owes a past-due obligation to the United States 
(as defined in subsection (b)). 

"(B) The Secretary shall not enter into an agreement with a 
physician under this section to the extent — 

"(iXD the physician has entered into a contract with the 
Secretary pursuant to section 204(a)(1) of the Public Health 
Service Amendments of 1987, and 

"(II) the physician has fulfilled or (as determined by the 
Secretary) is fulfilling the terms of such contract; or 

"(ii) the liability of the physician under such section 
204(a)(1) has otherwise been relieved under such section; or 
"(iii) the physician is performing such physician's service 
obligation under a forbearance agreement entered into with 
the Secretary under subpart II of part D of title III of the 
Public Health Service Act. 
"(2) The agreement under this section shall provide that — 
"(A) deductions shall be made from the amounts other- 
wise payable to the physician under this title, in accordance 
with a formula and schedule agreed to by the Secretary and 
the physician, until such past-due obligation (and accrued 
interest) have been repaid; 

"(B) payment under this title for services provided by 
such physician shall be made only on an assignment-related 
basis; 

"(C) if the physician does not provide services, for which 
payment would otherwise be made under this title, of a 
sufficient quantity to maintain the offset collection accord- 
ing to the agreed upon formula and schedule — 

"(i) the Secretary shall immediately inform the 
Attorney General, and the Attorney General shall 
immediately commence an action to recover the fuP 
amount of the past-due obligation, and 

"(ii) subject to paragraph (3), the Secretary shall 
immediately exclude the physician from the program 
under this title, until such time as the entire past-due 
obligation has been repaid. 
"(3) If the physician refuses to enter into an agreement or 
breaches any provision of the agreement — 

"(A) the Secretary shall immediately inform the Attorney 
General, and the Attorney General shall immediately com- 
mence an action to recover the full amount of the past-due 
obligation, and 



101 STAT. 1330-96 PUBLIC LAW 100-203— DEC. 22, 1987 

"(B) subject to paragraph (3), the Secretary shall imme- 
diately exclude the physician from the program under this 
title, until such time as the entire past-due obligation has 
been repaid. 

"(4) The Secretary shall not bar a physician pursuant to 
paragraph (2)(C)(ii) or paragraph (3)(B) if such physician is a sole 
community physician or sole source of essential specialized 
services in a community. 
"(b) Past-Due Obugation.— For purposes of this section, a past- 
due obligation is any amount- 
ed) owed by a physician to the United States by reason of a 
breach of a scholarship contract under section 338E of the 
Public Health Service Act, and 

"(2) which has not been paid by the deadline established by 
the Secretary pursuant to section 338E of the Public Health 
Service Act, and has not been canceled, waived, or suspended by 
the Secretary pursuant to such section. 
"(c) Collection Under This Section Shall Not Be Exclusive.— 
This section shall not preclude the United States from applying 
other provisions of law otherwise applicable to the collection of 
obligations owed to the United States, including (but not limited to) 
the use of tax refund offsets pursuant to section 3720 A of title 31, 
United States Code, and the application of other procedures pro- 
vided under chapter 37 of title 31, United States Code. 

"(d) Collection From Providers and Health Maintenance 
Organizations.— 

"(1) In the case of a physician who owes a past-due obligation, 
and who is an employee of, or affiliated by a medical services 
agreement with, a provider having an agreement under section 
1866 or a health maintenance organization or competitive medi- 
cal plan having a contract under section 1833 or section 1876, 
the Secretary shall deduct the amounts of such past-due obliga- 
tion from amounts otherwise payable under this title to such 
provider, organization, or plan. 

"(2) Deductions shall be in accordance with a formula and 
schedule agreed to by the Secretary, the physician and the 
provider, organization, or plan. The deductions shall be made 
from the amounts otherwise payable to the physician under this 
title as long as the physician continued to be employed or 
affiliated by a medical services agreement. 

"(3) Such deduction shall not be made until 6 months after 
the Secretary notifies the provider, organization, or plan of the 
amount to be deducted and the particular physicians to whom 
the deductions are attributable. 

"(4) A deduction made under this subsection shall relieve the 
physician of the obligation (to the extent of the amount col- 
lected) to the United States, but the provider, organization, or 
plan shall have a right of action to collect from such physician 
the amount deducted pursuant to this subsection (including 
accumulated interest). 

"(5) No deduction shall be made under this subsection if, 
within the 6-month period after notice is given to the provider, 
organization, or plan, the physician pays the past-due obliga- 
tion, or ceases to be employed by the provider, organization, or 
plan. 

"(6) The Secretary shall also apply the pro\asions of this 
subsection in the case of a physician who is a member of a group 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-97 

practice, if such group practice submits bills under this program 

as a group, rather than by individual physicians. 
"(e) Transfer From Trust Funds.— Amounts equal to the 
amounts deducted pursuant to this section shall be transferred from 
the Trust Fund from which the payment to the physician, provider, 
or other entity would otherwise have been made, to the general fund 
in the Treasury, and shall be credited as payment of the past-due 
obligation of the physician from whom (or with respect to whom) the 
deduction was made.". 

(b) Conforming Reference.— Section 338E(b)(l) of the Public 
Health Service Act (42 U.S.C. 254o(b)(l)) is amended by adding at the 
end thereof the following new sentence: 'Amounts not paid within 
such period shall be subject to collection through deductions in 
Medicare payments pursuant to section 1892 of the Social Security 
Act.". 

(c) Effective Date. — The amendments made by this section shall 42 USC I395ccc 
be effective on the date of the enactment of this Act. 

SEC. 40.52. ELIMINATION OF 197.5 FLOOR FOR PREVAILING PHYSICIAN 
CHARGES. 

(a) In General.— Section 1842(b)(3) of the Social Security Act (42 
U.S.C. 1395u(b)(3)) is amended by striking the next-to-last sentence 
(which begins "Notwithstanding the provisions of). 

(b) Effective Date. — The amendment made by subsection (a) 
shall apply to payment for services furnished on or after January 1, 
1988. 

SEC. 4053. APPLICATION OF MAXIMUM ALLOWABLE ACTUAL CHARGE 
(MAAC). 

(a) Appucation on Individual Charge Basis.— Section 1842(j)(l) 
of the Social Security Act (42 U.S.C. 1395u(j)(l)) is amended— 

(1) in the first sentence of subparagraph (B)(i), by striking 
"each such physician's actual charges" and inserting "the 
actual charges of each such physician"; 

(2) in the second sentence of subparagraph (B)(i), by striking 
"for such a service a physician's actual charge (as defined in 
subparagraph (CXvi)" and inserting "on a repeated basis for 
such a service an actual charge"; and 

(3) in subparagraph (C)(vi), by striking "and subparagraph 
(B)". 

(b) Adjustment. — In the case of a physician who did not have 
actual charges under title XVIII of the Social Security Act for a 
procedure in the calendar quarter beginning on April 1, 1984, but 
who establishes to the satisfaction of a carrier that he or she had 
actual charges (whether under such title or otherwise) for the 
procedure performed prior to June 30, 1984, the carrier shall com- 
pute the maiximum allowable actual charge under section 1842(j) of 
the Social Security Act for such procedure performed by such 
physician in 1988 based on such physician's actual charges for the 
procedure. 

(c) Effective Date.— The amendment made by subsection (a) shall 
apply to charges imposed for services furnished on or after April 1, 
1988. 



42 USC 1395u 
note. 



42 USC 1395u 
note. 



42 USC 1395u 
note. 



19-139 0 - 88 - 4 ( 203) 



101 STAT. 1330-98 PUBLIC LAW 100-203— DEC. 22, 1987 



SEC. 4054. APPLYING COPAYMENT AND DEDUCTIBLE TO CERTAIN OUT- 
PATIENT PHYSICIANS' SERVICES. 

Notwithstanding any other provision of law, payment under part 
B of title XVIII of the Social Security Act for physicians' services 
specified in section 1833(i)(l) of such Act and furnished on or after 
April 1, 1988, in an ambulatory surgical center or hospital out- 
patient department on an assignment-related basis shall be subject | 
to the deductible under section 1833(b) of such Act and 20 percent 
coinsurance. 

SEC. 4055. PHYSICIAN PAYMENT STUDIES. 

(a) Definitions of Medical and Surgical Procedures. — 

(1) Report on variations in carrier payment practice. — 
The Secretary of Health and Human Services (in this section 
referred to as the "Secretary") shall conduct a study of vari- 
ations in payment practices for physicians' services among the 
different carriers under section 1842 of the Social Security Act. 
Such study shall examine carrier variations in the services 

^ included in global fees and pre- and post-operative services 
included in payment for the operation. The Secretary shall 
report to Congress on such study by not later than May 1, 1988. 

(2) Uniform definitions of procedures for payment pur- 
poses. — The Secretary shall develop, in consultation with appro- 
priate national medical specialty societies and by not later than 
July 1, 1989, uniform definitions of physicians' services (includ- 
ing appropriate classification scheme for procedures) which 
could serve as the basis for making payments for such services 
under part B of title XVIII of the Social Security Act. In 
developing such list, to the extent practicable — 

(A) ancillary services commonly performed in conjunction j 
with a major procedure would be included with the major 
procedure; 

(B) pre- and post-procedure services would be included in 
the procedure; and I 

(C) similar procedures would be listed together if the 
procedures are similar in resource requirements. 

42 use 1395W-1 (b) EXPANSION OF RELATIVE VaLUE ScALE (RVS) StUDY.— 

note. (1) Additional services.— The Secretary shall expand the 

study being conducted, under section 1845(e) of the Social Secu- 
rity Act, to develop a relative value scale for physicians' services 
to include physicians' services in the fields of cardiology, der- 
matology, emergency medicine, gastroenterology, hematology, 
infectious disease, nephrology, neurology, neurosurgery, nuclear 
medicine, oncology, physical medicine and rehabilitation, plas- 
tic surgery, pulmonary medicine, and radiation therapy, and for 
physicians who specialize in osteopathic procedures. i 

(2) No DELAY IN CURRENT STUDY. — The expansion under para- 
graph (1) shall not be conducted in a manner that delays the 
completion of the current study or the report to Congress 

Reports. required under section 1845(e)(3) of the Social Security Act. The 

Secretary shall report to Congress on the services described in 
paragraph (1) by not later than October 1, 1989. 

Reports. (3) PROMPT SUBMITTAL OF STUDY RESULTS TO PHYSICIAN PAY- 

MENT REVIEW COMMISSION. — The Secretary shall submit to the 
Physician Payment Review Commission a copy of any report 
submitted to the Secretary pursuant to a cooperative agreement 
in the fulfillment of the requirement of section 1845(e) of such 



42 use 1395/ 
note. 



42 use 1395u 
note. 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-99 



Act, with all relevant supporting data (including survey data, 
analytic data files, and file documentation), by no later than 30 
days after the date the final report is received by the Secretary. 

[c) Other Physician Payment Studies.— 

(1) Fee schedule implementation. — The Secretary shall con- 
duct a study of changes in the payment system for physicians' 
services, under part B of title XVIII of the Social Security Act, 
that would be required for the implementation of a national fee 
schedule for such services furnished on or after January 1, 1990. 
Such study shall identify any major technical problems related 
to such implementation and recommendations on ways in which 
to address such problems. The Secretary shall report to the 
Congress on such study by not later than July 1, 1989. 

(2) Volume and intensity of physician services.— The Sec- 
retary shall conduct a study of issues relating to the volume and 
intensity of physicians' services under part B of title XVIII of 
the Social Security Act, including— 

(A) historical trends with regard to increases in the 
volume and intensity of physicians' services furnished on a 
per enrollee basis (with appropriate adjustments to account 
for changes in the demographic composition of the medi- 
care population); 

(B) geographic variations in volume and intensity in 
physicians' services; 

(C) an analysis of the effectiveness of methods currently 
used under such part to ensure that payments under such 
part are made only for services which are medically 
necessary; 

(D) the development and analysis of alternative methods 
to control the volume of services; and 

(E) the impact of the implementation of the relative value 
scale developed under section 1845(e) of such Act on the 
volume and intensity of physicians' services. 

The Secretary shall submit to Congress an interim report on 
such study not later than May 1, 1988, and a final report on 
such study not later than May 1, 1989. 

(3) Survey of out-of-pocket costs of medicare beneficiaries 
FOR health care SERVICES.— The Secretary shall conduct a 
survey to determine the distribution of — 

(A) the liabilities and expenditures for health care serv- 
ices of individuals entitled to benefits under title XVIII of 
the Social Security Act, including liabilities for charges (not 
paid on an assignment-related basis) in excess of the reason- 
able charge recognized, and 

(B) the collection rates among different classes of physi- 
cians for such liabilities, including collection rates for re- 
quired coinsurance and for charges (not paid on an assign- 
ment-related basis) in excess of the resisonable charge recog- 
nized. 

The Secretary shall report to Congress on such study by not 
later than July 1, 1990. 

(d) Study of Payment for Chemotherapy in Physicians' 
Offices.— 

(1) In general.— The Secretary shall study ways of modifying 
part B of title XVIII of the Social Security Act to permit 
adequate payment under such part for the costs associated with 
providing chemotherapy to cancer patients in physicians' of- 



42 use 1395/ 
note. 



Reports. 



Reports. 



Reports. 

42 use 1395/ 
note. 



101 STAT. 1330-100 PUBLIC LAW 100-203— DEC. 22, 1987 

flees. The study shall be performed in consultation with physi- 
cians and other health care providers who are experts in cancer 
therapy and with representation of health insurers who have 
experience in these payment issues. 

(2) Report. — The Secretary shall report to Congress on the 
results of the study by not later than April 1, 1989. 

Subpart B— Provisions Relating to Payments for Other 

Services 

2 use 902 note. SEC. 4061. EXTENSION OF REDUCTION FOR OTHER PART B ITEMS AND 

SERVICES PAYMENTS UNDER SEQUESTER ORDER. 

Notwithstanding any other provision of law (including any other 
provision of this Act), the reductions in the amount of payments 
required under title XVIII of the Social Security Act made by the 
final sequester order issued by the President on November 20, 1987, 
pursuant to section 252(b) of the Balanced Budget Emergency Deficit 
Control Act of 1985 shall continue to be effective (as provided by 
sections 252(a)(4)(B) and 256(d)(2) of such Act) through March 31, 
1988, with respect to payments for all items and services (other than 
physicians' services) under part B of such title. 

SEC. 4062. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT, PROSTHETIC 
DEVICES, ORTHOTICS, AND PROSTHETICS. 

42 use 1395u (a) 1-YeAR FREEZE ON CHARGE LIMITATIONS. — 

note. (1) In GENERAL. — In imposing limitations on allowable charges 

for items and services (other than physicians' services) fur- 
nished in 1988 under part B of title XVIII of such Act and for 
which payment is made on the basis of the reasonable charge 
for the item or service, the Secretary of Health and Human 
Services shall not impose any limitation at a level higher than 
the same level as was in effect in December 1987. 

(2) Transition.— The provisions of section 4041(a)(2) (other 
than subparagraph (D) thereoO of this subtitle shall apply to 
suppliers of items and services described in paragraph (1), and 
directories of participating suppliers of such items and services, 
in the same manner as such section applies to physicians fur- 
nishing physicians' services, and directories of participating 
physicians. 

(b) Amount and Frequency of Payment for Durable Medical 
Equipment, Prosthetic Devices, Orthotics, and Prosthetics.— 
Part B of title XVIII of the Social Security Act is amended by 
inserting after section 1833 the following new section: 

"special PAYMENT RULES FOR PARTICULAR SERVICES 

42 use 1395m. "SeC. 1834. (a) PAYMENT FOR DURABLE MeDICAL EQUIPMENT, PROS- 

THETIC Devices, Orthotics, and Prosthetics.— 
"(1) General rule for payment.— 

"(A) In general. — With respect to a covered item (as 
defined in paragraph (13)) for which pa)mient is determined 
under this subsection, payment shall be made in the fre- 
quency specified in paragraphs (2) through (7) and in an 
amount equal to 80 percent of the payment basis described 
in subparagraph (B). 

"(B) Payment basis. — The payment basis described in 
this subparagraph is the lesser of— 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-101 



"(i) the actual charge for the item, or 

"(ii) the payment amount recognized under para- 
graphs (2) through (7) of this subsection for the item; 
except that clause (i) shall not apply if the covered item is 
furnished by a public home health agency (or by another 
home health agency which demonstrates to the satisfaction 
of the Secretary that a significant portion of its patients are 
low income) free of charge or at nominal charges to the 
public. 

"(C) Exclusive payment rule.— This subsection shall 
constitute the exclusive provision of this title for payment 
for covered items under this part. 
"(2) Payment for inexpensive and other routinely pur- 
chased DURABLE MEDICAL EQUIPMENT. — 

"(A) In general. — Payment for an item of durable medi- 
cal equipment (as defined in paragraph (13XA)) — 

"(i) the purchase price of which does not exceed $150, 

or 

"(ii) which the Secretary determines is acquired at 
least 75 percent of the time by purchase, 
shall be made on a rental basis or in a lump-sum amount 
for the purchase of the item. The payment amount recog- 
nized for purchase or rental of such equipment is the 
amount specified in subparagraph (B) for purchase or 
rental, except that the total amount of rental payments 
with respect to an item may not exceed the payment 
amount specified in subparagraph (B) with respect to the 
purchase of the item. 

"(B) Payment amount.— For purposes of subparagraph 
(A), the amount specified in this subparagraph, with respect 
to the purchase or rental of an item furnished in a carrier 
service area — 

"(i) in 1989 is the average allowed charge in the area 
for the purchase or rental, respectively, of the item for 
the 12-month period ending on Jane 30, 1987, increased 
by the percentage increase in the consumer price index 
for all urban consumers (U.S. city average) for the 6- 
month period ending with December 1987; or 

"(ii) in a subsequent year, is the amount specified in 
this subparagraph for the preceding year increased by 
the percentage increase in the consumer price index for 
all urban consumers (U.S. city average) for the 12- 
moiith period ending with June of that preceding year. 
"(3) Payment for items requiring frequent and substan- 
tial SERVICING.— 

"(A) In general.— Payment for a covered item (such as 
ventilators , aspirators, IPPB machines, and nebulizers) for 
which there must be frequent and substantial servicing in 
order to avoid risk to the patient's health shall be made on 
a monthly basis for the rental of the item and the amount 
recognized is the amount specified in subparagraph (B). 

"(B) Payment amount.— For purposes of subparagraph 
(A), the amount specified in this subparagraph, with respect 
to an item or device furnished in a carrier service area — 
"(i) in 1989 is the average allowable charge in the 
area for the rental of the item or device for the 12- 



101 STAT. 1330-102 PUBLIC LAW 100-203— DEC. 22, 1987 



month period ending with June 1987,^ ^ increased by 
the percentage increase in the consumer price index for 
all urban consumers (U.S. city average) for the 6-month 
period ending with December 1987; or 

"(ii) in a subsequent year, is the amount specified in 
this subparagraph for the preceding year increased by 
the percentage increase in the consumer price index for 
all urban consumers (U.S. city average) for the 12- 
month period ending with June of that preceding year. 
"(4) Payment for certain customized items.— Payment with 
respect to a covered item that is uniquely constructed or 
substantially modified to meet the specific needs of an individ- 
ual patient shall be made in a lump-sum amount for the 
purchase of the item in a payment amount based upon the 
carrier's individual consideration for that item, and for the 
reasonable and necessary maintenance and service for parts 
and labor not covered by the supplier's or manufacturer's war- 
ranty, when necessary during the period of medical need, and 
the amount recognized for such maintenance and service shall 
be paid on a lump-sum, as needed basis based upon the carrier's 
individual consideration for that item. 
"(5) Payment for oxygen and oxygen equipment.— 

"(A) In general. — Payment for oxygen and oxygen 
equipment shall be made on a monthly basis in the monthly 
payment amount recognized under paragraph (9) for oxygen 
and oxygen equipment (other than portable oxygen equip- 
ment), subject to subparagraphs (B) and (C). 

"(B) Add-on for portable oxygen equipment.— When 
portable oxygen equipment is used, but subject to subpara- 
graph (D), the payment amount recognized under subpara- 
graph (A) shall be increased by the monthly payment 
amount recognized under paragraph (9) for portable oxygen 
equipment. 

"(C) Volume adjustment. — When the attending physi- 
cian prescribes an oxygen flow rate — 

"(i) exceeding 4 liters per minute, the payment 
amount recognized under subparagraph (A), subject to 
subparagraph (D), shall be increased by 50 percent, or 
"(ii) of less than 1 liter per minute, the payment 
amount recognized under subparagraph (A) shall be 
decreased by 50 percent. 
"(D) Limit on adjustment.— When portable oxygen 
equipment is used and the attending physician prescribes 
an oxygen flow rate exceeding 4 liters per minute, there 
shall only be an increase under either subparagraph (B) or 
(C), whichever increase is larger, and not under both such 
subparagraphs. 

"(6) Payment for other covered items (other than dur- 
able medical equipment). — Payment for other covered items 
(other than durable medical equipment and other covered items 
described in paragraph (3), (4), or (5)) shall be made in a lump- 
sum amount for the purchase of the item in the amount of the 
purchase price recognized under paragraph (8). 



33 Copy read "June, 1987,". 
3* Copy read "lump sum". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330 

"(7) Payment for other items of durable medical equip- 
ment.— 

"(A) In general. — In the case of an item of durable 
medical equipment not described in paragraphs (2) through 
(6)- 

"(i) payment shall be made on a monthly basis for the 
rental of such item during the period of medical need 
O^ut payments under this subparagraph may not 
extend over a period of continuous use of longer than 
15 months), and, subject to subparagraph (B), the 
amount recognized for each such month is 10 percent of 
the purchase price recognized under paragraph (8) with 
respect to the item; 

''(ii) during the succeeding 6-month period of medical 
need, no payment shall be made for rental or servicing 
of the item; and 

"(iii) during the first month of each succeeding 6- 
month period of medical need, a service and mainte- 
nance payment may be made (for parts and labor not 
covered by the supplier's or manufacturer's warranty, 
as determined by the Secretary to be appropriate for 
the particular type of durable medical equipment) and 
the amount recognized for each such 6-month period is 
the lower of (I) a reasonable and necessary mainte- 
nance and servicing fee established by the carrier, or 
(II) 10 percent of the total of the purchase price recog- 
nized under paragraph (8) with respect to the item. 
The Secretary shall determine the meaning of the term 
'continuous' in subparagraph (A). 
"(B) Range for rental amounts.— 

"(i) For i989.— For items furnished during 1989, the 
payment amount recognized under subparagraph (A)(i) 
shall not be more than 115 percent, and shall not be 
less than 85 percent, of the prevailing charge estab- 
lished for rental of the item January 1987, increased by 
the percentage increase in the consumer price index for 
all urban consumers (U.S. city average) for the 6-month 

period ending with December [ ].^^ 

"(ii) For 1990.— For items furnished during 1990, the 
payment amount recognized under subparagraph (A)(i) 
shall not be more than the maximum amount estab- 
lished under clause (i), and shall not be less than the 
minimum amount established under such clause, for 
1989, each such amount increased by the percentage 
increase in the consumer price index for all urban 
consumers (U.S. city average) for the 12-month peri 
ending with June 1989. 
"(8) Purchase price recognized for miscellaneous devices 
AND items.— For purposes of paragraphs (6) and (7), the amount 
that is recognized under this paragraph as the purchase price 
for a covered item is the amount described in subparagraph (C) 
of this paragraph, determined as follows: 

"(A) Computation of local purchase price.— Each car- 
rier under section 1842 shall compute a base local purchase 
price for the item as follows: 

"(i) The carrier shall compute a base local purchase 
price, for each item described — 



Copy not legible. 



101 STAT. 1330-104 PUBLIC LAW 100-203— DEC. 22, 1987 

"(I) in paragraph (6) equal to the average allow- 
able charge in the locality for the purchase of the 
item for the 12-month period ending with June 
1987, or 

"(II) in paragraph (7) equal to the average of the 
purchase prices on the claims submitted on an 
assignment-related basis for the unused item sup- 
plied during the 6-month period ending with 
December 1986. 
"(ii) The carrier shall compute a local purchase price, 
with respect to the furnishing of each particular item — 
V "(I) in 1989, equal to the base local purchase 

price computed under clause (i) increased by the 
percentage increase in the consumer price index 
, for all urban consumers (U.S. city average) for the 

6-month period ending with December 1987, or 
"(II) in 1990, 1991, or 1992, equal to the local 
purchase price computed under this clause for the 
previous year increased by the percentage increase 
in the consumer price index for all urban con- 
sumers (U.S. city average) for the 12-month period 
ending with June of the previous year. 
"(B) Computation of regional purchase price.— With 
respect to the furnishing of a particular item in each region 
(as defined in section 1886(dX2)(D)), the Secretary shall 
• compute a regional purchase price — 

"(i) for 1991, and for 1992, equal to the average 
(weighted by relative volume of all claims among car- 
riers) of the local purchase prices for the carriers in the 
region computed under subparagraph (A)(ii)(II) for the 
year, and 

"(ii) for each subsequent year, equal to the regional 
purchase price computed under this subparagraph for 
the previous year increased by the percentage increase 
in the consumer price index for all urban consumers 
(U.S. city average) for the 12-month period ending with 
June of the previous year. 
"(C) Purchase price recognized. — For purposes of para- 
graphs (6) and (7) and subject to subparagraph (D), the 
amount that is recognized under this paragraph as the 
purchase price for each item furnished — 

"(i) in 1989 or 1990, is 100 percent of the local pur- 
chase price computed under subparagraph (A)(ii)(I); 

"(ii) in 1991, is the sum of (I) 75 percent of the local 
purchase price computed under subparagraph (A)(ii)(II) 
for 1991, and (II) 25 percent of the regional purchase 
price computed under subparagraph (B) for 1991; 

"(iii) in 1992, is the sum of (I) 50 percent of the local 
purchase price computed under subparagraph (A)(ii)(II) 
for 1992, and (II) 50 percent of the regional purchase 
price computed under subparagraph (B) for 1992; and 
"(iv) in 1993 or a subsequent year, is the regional 
purchase price computed under subparagraph (B) for 
* that year. 

"(D) Range on amount recognized. — The amount that is 
recognized under subparagraph (C) as the purchase price 
for an item furnished — 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-105 



"(i) in 1991, may not exceed 130 percent, and may not 
be lower than 80 percent, of the average of the pur- 
chase prices recognized under such subparagraph for 
all the carrier service areas in the United States in that 
year; and 

"(ii) in a subsequent year, may not exceed 125 per- 
cent, and may not be lower than 85 percent, of the 
average of the purchase prices recognized under such 
subparagraph for all the carrier service areas in the 
United States in that year. 
"(9) Monthly payment amount recognized with respect to 
OXYGEN AND OXYGEN EQUIPMENT. — For purposes of paragraph 
(5), the amount that is recognized under this paragraph for 
payment for oxygen and oxygen equipment is the monthly 
payment amount described in subparagraph (C) of this para- 
graph. Such amount shall be computed separately (i) for all 
items of oxygen and oxygen equipment (other than portable 
oxygen equipment) and (ii) for portable oxygen equipment (each 
such group referred to in this paragraph as an 'item ). 

"(A) Computation of local monthly payment rate.— 
Each carrier under this section shall compute a base local 
payment rate for each item as follows: 

"(i) The carrier shall compute a base local average 
monthly payment rate per beneficiary as an amount 
equal to (I) the total reasonable charges for the item 
during the 12-month period ending with December 
1986, divided by (II) the total number of months for all 
beneficiaries receiving the item in the area during the 
12-month period for which the carrier made payment 
for the item under this title. 

"(ii) The carrier shall compute a local average 
monthly payment rate for the item applicable — 

(I) to 1989, equal to 95 percent of the base local 
average monthly payment rate computed under 
clause (i) for the item increased by the percentage 
increase in the consumer price index for all urban 
consumers (U.S. city average) for the 12-month 
period ending with December 1987, or 

"(II) to 1990 and to 1991, equal to the local 
average monthly payment rate computed under 
this clause for the item for the previous year in- 
creased by the percentage increase in the 
consumer price index for all urban consumers (U.S. 
city average) for the 12-month period ending with 
June of the previous year. 
"(B) Computation of regional monthly payment 
rate. — With respect to the furnishing of an item in each 
region (as defined in section 1886(dX2)(D)), the Secretary 
shall compute a regional monthly payment rate — 

"(i) for 1991, and 1992, equal to the average (weighted 
by relative volume of all claims among carriers) of the 
local monthly payment rates for the carriers in the 
region computed under subparagraph (AXiiXID for the 
year, and 

"(ii) for each subsequent year, equal to the regional 
monthly payment rates computed under this subpara- 
graph for the previous year increased by the percent- 



101 STAT, 1330-106 



PUBLIC LAW 100-203— DEC. 22, 1987 



age increase in the consumer price index for all urban 
consumers (U.S. city average) for the 12-month period 
ending with June of the previous year. 
"(C) Monthly payment amount recognized. — For pur- 
poses of paragraph (5), the amount that is recognized under 
this paragraph as the base monthly payment amount for 
each item furnished — 

"(i) in 1989 and in 1990, is 100 percent of the local 
average monthly payment rate computed under 
subparagraph (A)(ii)(I) for the item; 

"(ii) in 1991, is the sum of (I) 75 percent of the local 
average monthly payment rate computed under 
subparagraph (A)(ii)(II) for the item for 1991, and (II) 25 
percent of the regional monthly payment rate com- 
puted under subparagraph (B)(i) for the item for 1991; 

"(iii) in 1992, is the sum of (I) 50 percent of the local 
average monthly payment rate computed under 
subparagraph (A)(ii)(II) for the item for 1992, and (II) 50 
percent of the regional monthly payment rate com- 
puted under subparagraph (B)(i) for the item for 1992; 
and 

"(iv) in a subsequent year, is the regional monthly 
payment rate computed under subparagraph (B) for the 
item for that year. 
"(D) Range on amount recognized. — The amount that is 
recognized under subparagraph (C) as the base monthly 
payment amount for an item furnished — 

"(i) in 1991, may not exceed 130 percent, and may not 
be lower than 80 percent, of the average of the base 
monthly payment amounts recognized under such 
subparagraph for all the carrier service areas in the 
United States in that year; and 

"(ii) in a subsequent year, may not exceed 125 per- 
cent, and may not be lower than 85 percent, of the 
average of the base monthly payment amounts recog- 
nized under such subparagraph for all the carrier serv- 
ice areas in the United States in that year. 
"(10) Exceptions and Adjustments. — 

"(A) Areas outside continental united states. — Excep- 
tions to the amounts recognized under the previous provi- 
sions of this subsection shall be made to take into account 
the unique circumstances of covered items furnished in 
Alaska, Hawaii, or Puerto Rico. 

"(B) Adjustment for inherent reasonableness.— For 
covered items furnished on or after January 1, 1991, the 
Secretary is authorized to apply the provisions of para- 
graphs (8) and (9) (other than subparagraph (D)) of section 
1842(b) to covered items and suppliers of such items. 

"(C) Transcutaneous electrical nerve stimulator 
(tens) . — In order to permit an attending physician time to 
determine whether the purchase of a transcutaneous elec- 
trical nerve stimulator is medically appropriate for a 
particular patient, the Secretary may determine an appro- 
priate payment amount for the initial rental of such item 
for a period of not more than 2 months. If such item is 
subsequently purchased, the payment amount with respect 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-107 



to such purchase is the payment amount determined under 
paragraph (2). 

"(11) Improper billing and requirement of physician 

ORDER. — 

"(A) Improper billing for certain rental items. — Not- 
withstanding any other provision of this title, a supplier of 
a covered item for which payment is made under this 
subsection and which is furnished on a rental basis shall 
continue to supply the item without charge (other than a 
charge provided under this subsection for the servicing of 
the item) after rental payments may no longer be made 
under this subsection. If a supplier knowingly and willfully 
violates the previous sentence, the Secretary may apply 
sanctions against the supplier under subsection {j')(2) in the 
same manner such sanctions may apply with respect to a 
physician. 

"(B) Requirement of physician order. — The Secretary is 
authorized to require, for specified covered items, that pay- 
ment may be made under this subsection with respect to 
the item only if a physician has communicated to the 
supplier, before delivery of the item, a written order for the 
item. 

"(12) Regional carriers.— The Secretary may designate, by 
regulation under section 1842, one carrier for each region (as 
defined in section 1886(dX2)(D)) to process all claims within the 
region for co^'ered items under this section. 

"(13) Covered item. — In this subsection, the term 'covered 
item' means — 

"(A) durable medical equipment (as defined in section 
1861(n)), including such equipment described in section 
1861(mX5); 

"(B) prosthetic devices (described in section 1861(sX8)), but 
not including parenteral and enteral nutrition nutrients, 
supplies, and equipment; and 

"(C) orthotics and prosthetics (described in section 
1861(sX9)); 
but does not include intraocular lenses. 

"(14) Carrier. — In this subsection, any reference to the term 
'carrier' includes a reference, with respect to durable medical 
equipment furnished by a home health agency as part of home 
health services, to a fiscal intermediary.", 
(c) Study and Evaluation.— (1) The Secretary of Health and 42 use I395m 
Human Services shall monitor the impact of the amendments made note, 
by this section on the availability of covered items and shall evalu- 
ate the appropriateness of the volume adjustment for oxygen and 
oxygen equipment under section 1834(aX5XC) of the Social Security 
Act (as amended by subsection (b) of this section). The Secretary Reports, 
shsdl report to Congress, by not later than January 1, 1991, on such 
impact and on the evaluation and shall include in such report 
recommendations for changes in payment methodology for covered 
items under section 1834(a) of such Act. 

(2) Before Jginuary 1, 1991, the Secretary may not conduct any 
demonstration project respecting alternative methods of payment 
for covered items under title XVIII of the Social Security Act. 

(3) In this subsection, the term "covered item" has the meaning 
given such term in section 1834(aX13) of the Social Security Act (as 
amended by subsection (b) of this section). 



101 STAT. 1330-108 PUBLIC LAW 100-203— DEC. 22, 1987 



(4) The Secretary shall, upon written request, provide the data 
and information used in determining the payment amounts for 
covered items under section 1834(a) of the Social Security Act. 
Reports. (5) The Comptroller General shall conduct a study on the appro- 

priateness of the level of payments allowed for covered items under 
the medicare program, and shall report to Congress on the results of 
such study (including recommendations on the transition to regional 
- or national rates) by not later than January 1, 1991. Entities fur- 
nishing such items which fail to provide the Comptroller General 
with reasonable access to necessary records to carry out the study 
under this paragraph are subject to exclusion from the medicare 
program under section 1128(a) of the Social Security Act. 

(d) Conforming Amendments.— 

(1) Section 1814 of such Act (42 U.S.C. 1395f) is amended— 

(A) in subsection (jX2)(B), by amending subparagraph (B) 
to read as follows: 

"(B) Section 1834(a)(1)(B).", and 

(B) in subsection (k), by striking all that follows "shall be" 
and insert "the amount described in section 1834(a)(1).". 

(2) Section 1832(a) of such Act (42 U.S.C. 1395k(a)) is 
amended — 

(A) in paragraph (2)(A), by inserting "(other than items 
described in subparagraph (G))" after "services"; 

(B) in paragraph (2XB), by inserting "(other than items 
described in subparagraph (G))" after "medical and other 
health services"; and 

(C) in paragraph (2) — 

(i) by striking "and" at the end of subparagraph (E), 
\ (ii) by striking the period at the end of subparagraph 
(F) and inserting "; and", and 

(iii) by adding at the end the following new subpara- 
graph: 

"(G) covered items (described in section 1834(a)(13)) fur- 
nished by a provider of services or by others under arrange- 
ments with them made by a provider of services.". 
42 use 1395/. (3) Section 1833(a) of such Act (42 U.S.C. 13951(a)) is 

amended — 

(A) in paragraph (1) — 

(i) by striking "; and" at the end of clause (G) and 
inserting a comma, and 

(ii) by adding at the end the following: "and (I) with 
respect to covered items (described in section 
1834(aX13)), the amounts paid shall be the amounts 
described in section 1834(aXl),"; 

(B) in paragraph (2) — 

(i) by striking "and (F)" and inserting "(F), and (G)", 
and 

(ii) in subparagraph (A), by striking "(other than 
durable medical equipment)"; 

^'*^(C) by striking "and" at the end of paragraph (3); 
* 34c striking the period at the end of paragraph (4) 

and inserting "; and"; and 



Copy read "(B)". 
Copy read "(C)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-109 

^^^'(E) by adding at the end the following new paragraph: 
"(5) in the case of covered items (described in section 
1834(a)(13)) the amounts described in section 1834(a)(1).". 

(4) Section 1866(a)(2)(A) of such Act (42 U.S.C. 1395cc(a)(2)(A)) 
is amended by adding at the end the following new sentence: 
"Notwithstanding the first sentence of this subparagraph, a 
home health agency may charge such an individual or person, 
with respect to covered items subject to payment under section 
1834(a), the amount of any deduction imposed under section 
1833(b) and 20 percent of the payment basis described in section 
1834(a)(2).". 

(5) Section 1889 of such Act (42 U.S.C. 1395zz) is repealed. 42 use I395zz. 
(e) Effective Date. — The amendments made by this section shall 42 use i395f 

apply to covered items furnished on or after January 1, 1989. note. 

SEC. 4063. PAYMENT FOR INTRAOCULAR LENSES. 

(a) Provided in Physician's OFFiCE.—Section 1842 of the Social 
Security Act (42 U.S.C. 1395u), as previously amended is amended — 

(1) in subsection (bXllXC), as inserted by section 4046(a)(1)(C) 
of this subtitle — 

(A) by inserting "(i)" after "(C)" and by adding at the end 
the following new clause: 

"(ii) The reasonable charge for an intraocular lens implanted 
during cataract surgery in a physician's office may not exceed the 
actual acquisition cost for the lens (taking into account any dis- 
count) plus a handling fee (not to exceed 5 percent of such actual 
acquisition cost).", and 

(B) ^^ in subparagraph (D), as so redesignated and as 
amended by section 4046(aXl) of this subtitle, by inserting 
"or item" after "service" or "services" each place either 
appears; and 

(2) in subsection (jXlXD), as added by section 4045(cXlXB) of 
this subtitle and as amended by 4046(aX2) of this subtitle— 

(A) in clause (ii), by striking "and" at the end of subclause 
(IV), by redesignating subclause (V) as subclause (VI) and 
by inserting before such subclause the following new 
subclause: 

"(rV) a reasonable charge limit is established under subsec- 
tion (bXllXC)(ii), and"; and 

(B) in clause (iii) — 

(i) by striking "or" at the end of subclause (I), 

(ii) in subclause (II), by striking "(bXllXO" and 
inserting "(bXllXCXi)", 

(iii) by striking the period at the end of subclause (II) 
and inserting "; or", and 

(iv) by adding at the end the following new subclause: 
"(III) under subsection ObXHXCXii), the payment allowance 

established under such subsection.". 

(b) Provided in Ambulatory Surgical Centers.— Section 
1833(iX2XA) of such Act (42 U.S.C. 13951(iX2XA)) is amended— 42 use 1395Z. 

(1) by striking "and" at the end of clause (i), 

(2) by striking the period at the end of clause (ii) and inserting 
", and", and 

(3) by inserting after clause (ii) the following new clause: 



a*" Copy read "(D)". 
Copy read "(C)". 



101 STAT. 1330-110 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1395/ 
note. 

42 use 1395u 
note. 



42 use 1395/ 
note. 



42 use 1395/. 



42 use 1395/ 
note. 



42 use 1395/ 
note. 



Reports. 



"(iii) in the case of implantation of an intraocular lens during 
cataract surgery includes payment which is reasonable and 
related to the cost of acquiring the class of lens involved.". 

(c) Effective Date. — The amendments made by this section shall 
apply to items furnished on or after July 1, 1988. 

(d) Special Rule. — With respect to the^^^ establishment of a 
reasonable charge limit under section 1842(b)(ll)(C)(ii) of the Social 
Security Act, in applying section 1842(j)(l)(D)(i) of such Act, the 
matter beginning with "plus" shall be considered to have been 
deleted. 

SEC. 4064. CLINICAL DIAGNOSTIC LABORATORY TESTS. 

(a) Limitation on Changes in Fee Schedules.— 

(1) 3-MONTH freeze IN FEE SCHEDULES.— Notwithstanding any 
other provision of law, any change in the fee schedules for 
clinical laboratory diagnostic laboratory tests under part B of 
title XVIII of such Act which would have become effective for 
tests furnished on or after January 1, 1988, shall not be effective 
for tests furnished during the 3-month period beginning on 
January 1, 1988. 

(2) No CPI INCREASE IN 1988.— N twithstanding any other 
provision of law, the Secretary of Health and Human Services 
shall not adjust the fee schedules established under section 
1833(h) of the Social Security Act for 1988 to take into account 
any increase in the consumer price index. 

(b) Fee Schedules and Payment Limits.— 

(1) Rebasing of fee schedules for certain automated and 
similar tests.— Section 1833(hX2) of the Social Security Act (42 
U.S.C. 13951(hX2)) is amended by adding at the end the follow- 
ing: "In establishing fee schedules under the first sentence of 
this paragraph with respect to automated tests and tests (other 
than cytopathology tests) which before July 1, 1984, the Sec- 
retary made subject to a limit based on lowest charge levels 
under the sixth sentence of section 1842(b)(3) performed after 
March 31, 1988, the Secretary shall reduce by 8.3 percent the fee 
schedules otherwise established for 1988.". 

(2) Nationwide payment umits.— Section 1833(h)(4)(B) of 
such Act is amended — 

(A) in clause (i), by striking "January" and inserting 
"April", and 

(B) by amending clause (ii) to read as follows: 

"(ii) March 31, 1988, and so long as a fee schedule for the test 
has not been established on a nationwide basis, is equal to the 
median of all the fee schedules established for that test for that 
laboratory setting under paragraph (1).". 

(3) Effective dates. — The amendments made by paragraphs 
(1) and (2) shall apply with respect to services furnished on or 
after April 1, 1988. 

(4) GAO STUDY of fee schedules.— The Comptroller General 
shall conduct a study of the level of the fee schedules estab- 
lished for clinical diagnostic laboratory services under section 
1833(hX2) of the Social Security Act to determine, based on the 
costs of, and revenues received for, such tests the appropriate- 
ness of such schedules. The Comptroller General shall report to 
the Congress on the results of such study by not later than 
January 1, 1990. Suppliers of such tests which fail to provide the 
Comptroller General with reasonable access to necessary 
records to carry out the study under this paragraph are subject 



Copy read "the the". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-111 



to exclusion from the medicare program under section 1128(a) of 
the Social Security Act. 

(c) Limitation on Application of 2 Percent Hospital Lab Dif- 
ferential. — Section 1833(h)(2) of such Act is amended by striking 
"hospital laboratory" and inserting "laboratory in a sole community 
hospital". 

(d) Intermediate Sanctions.— 

(1) Part B of title XVIII of such Act is amended by adding at 
the end thereof the following new section: 



42 use 1395Z. 



INTERMEDIATE SANCTIONS FOR PROVIDERS OF CLINICAL DIAGNOSTIC 
LABORATORY TESTS 

"Sec. 1846. (a) If the Secretary determines that any provider or 
clinical laboratory certified for participation under this title no 
longer substantially meets the conditions of participation specified 
under this title with respect to the provision of clinical diagnostic 
laboratory tests under this part, the Secretary may (for a period not 
to exceed one year) impose intermediate sanctions developed pursu- 
ant to subsection (b), in lieu of canceling immediately the certifi- 
cation of the provider or clinical laboratory. 

"(b)(1) The Secretary shall develop and implement — 

"(A) a range of intermediate sanctions to apply to providers or 
certified clinical laboratories under the conditions described in 
subsection (a), and 

"(B) appropriate procedures for appealing determinations 
relating to the imposition of such sanctions. 
"(2)(A) The intermediate sanctions developed under paragraph (1) 
shall include — 

"(i) directed plans of correction, 
"(ii) civil fines and penalties, 

"(iii) payment for the costs of onsite monitoring by an agency 
responsible for conducting certification surveys, and 

"(iv) suspension of all or part of the payments to which a 
provider or certified clinical laboratory would otherwise be 
entitled under this title with respect to clinical diagnostic lab- 
oratory tests provided on or after the date in which the Sec- 
retary determines that intermediate sanctions should be im- 
posed pursuant to subsection (a).^^ 
"(B) The sanctions specified in subparagraph (A) are in addition to 
sanctions otherwise available under State or Federal law. 

"(3) The Secretary shall develop and implement specific proce- 
dures with respect to when and how each of the intermediate 
sanctions developed under paragraph (1) is to be applied, the 
amounts of any fines, and the severity of each of these penalties. 
Such procedures shall be designed so as to minimize the time 
between identification of violations and imposition of these sanc- 
tions and shall provide for the imposition of incrementally more 
severe fines for repeated or uncorrected deficiencies.". 

(2) The amendment made by paragraph (1) shall become 
effective on January 1, 1990. 
(e) State Certification of High-Volume Physician Office 
Labs.— 

(1) Section 1861(s) of such Act (42 U.S.C. 1395x(s)) is amended, 
in the sentence following paragraph (11), by inserting "a labora- 



42 use 1395W-2. 



Effective date. 
42 use 1.395W-2 
note. 



3^'' Copy read "tests" ". 

'8 Subparagraphs " '(i)". " '(ii)", " '(iii)". and " '(iv)" indented incorrectly. 



101 STAT. 1330-112 PUBLIC LAW 100-203— DEC. 22, 1987 

tory not independent of a physician's office that has a volume of 
clinical diagnostic laboratory tests exceeding 5,000 per year" 
after "physician's office,". 
42 use I395x (2) The amendment made by paragraph (1) shall apply to 

note. diagnostic tests performed on or after January 1, 1990. 

SEC. 4065. RETURN ON EQUITY PAYMENTS TO OUTPATIENT DEPART- 
MENTS. 

(a) In General. — Section 1861(v)(l) of the Social Security Act (42 
U.S.C. 1395x(v)(l)) is amended by adding at the end thereof the 
following new subparagraph: 

"(S) Such regulations shall not include provision for specific rec- 
ognition of any return on equity capital with respect to hospital 
outpatient departments.". 

(b) Conforming Amendment.— Section 188103)(2)(C) of such Act 
(42 U.S.C. 1395rr(b)(2)(C)) is amended by striking "facilities" and 
inserting "facilities (other than hospital outpatient departments)". 

42 use I395x (c) EFFECTIVE Date.— The amendments made by this section shall 
note. become effective on January 1, 1988. 

SEC. 4066. PAYMENTS TO HOSPITAL OUTPATIENT DEPARTMENTS FOR 
RADIOLOGY. 

(a) Amounts Payable.— Section 1833 of the Social Security Act (42 
U.S.C. 13951) is amended— 

(1) in subsection (aX2)^ — 

(A) by striking "and" in subparagraph (C), 

(B) by adding "and" at the end of subparagraph (D), and 

(C) by adding at the end thereof the following new 
subparagraph: 

"(E) with respect to — 

"(i) outpatient hospital radiology services (including 
diagnostic and therapeutic radiology, nuclear medicine 
and CAT scan procedures, magnetic resonance imag- 
ing, and ultrasound and other imaging services), and 

"(ii) effective for procedures performed on or after 
October 1, 1989, diagnostic procedures (as defined by 
the Secretary) described in section 1861(s)(3) (other 
than diagnostic x-ray tests and diagnostic laboratory 
tests), 

the amount determined under subsection (n);"; and 

(2) by adding at the end, as previously am>'3nded, the following 
new subsection: 

"(n)(l)(A) The aggregate amount of the payments to be made for 
all or part of a cost reporting period beginning on or after October 1, 
1988 under this part for services described in subsection (a)(2)(E) 
shall be equal to the lesser of— 

"(i) the amount determined with respect to such services 
under subsection (aX2)(B), or 

"(ii) the blend amount for radiology services and diagnostic 
procedures determined in accordance with subparagraph (B). 
"(B)(i) The blend amount for radiology services and diagnostic 
procedures for a cost reporting period is the sum of— 

"(I) the cost proportion (as defined in clause (ii)) of the amount 
described in subparagraph (A)(i); and 

"(II) the charge proportion (as defined in clause (ii)(II)) of 62 
percent (for services described in subsection (aX2)(EXi)), or (for 
procedures described in subsection (a)(2XEXii)), 42 percent or 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-113 

such other percent established by the Secretary (or carriers 
acting pursuant to guidelines issued by the Secretary) based on 
prevailing charges established with actual charge data, of 80 
percent of the prevailing charge for participating physicians for 
the same services as if they were furnished in a physician's 
office in the same locality as determined under section 1842(b). 
"(ii) In this subparagraph: 

"(I) The term 'cost proportion' means 65 percent for all or any 
part of cost reporting periods which occur in fiscal year 1989 
and 50 percent for other cost reporting periods. 

"(II) The term 'charge proportion' means 35 percent for all or 
any parts of cost reporting periods which occur in fiscal year 
1989 and 50 percent for other cost reporting periods.". 
Ob) Conforming Amendment. — Section 1833(a)(2)(B) of such Act 
(42 U.S.C. 13951(a)(2)(B)) is amended in the matter preceding clause 
(i) by striking "(C) or (D)" and inserting "(C), (D), or (E)". 

(c) Effective Date.— The amendments made by subsection (a) 42 use 1395/ 
shall apply with respect to outpatient hospital radiology services note, 
furnished on or after October 1, 1988, and other diagnostic proce- 
dures performed on or after October 1, 1989. 

SEC. 4067. UPDATING MAXIMUM RATE OF PAYMENT PER VISIT FOR 
INDEPENDENT RURAL HEALTH CLINICS. 

(a) In General.— Section 1833 of the Social Security Act (42 U.S.C. 
13951) is further amended by inserting after subsection (e) the 
following new subsection: 

"(f) In establishing limits under subsection (a) on payment for 
rural health clinic services provided by independent rural health 
clinics, the Secretary shall establish such limit, for services pro- 
vided — 

"(1) in 1988, after March 31, at $46, and 

"(2) in a subsequent year, at the limit established under this 
subsection for the previous year increased by the percentage 
increase in the medicare economic index (referred to in the 
fourth sentence of section 1842(b)(3^) applicable to physicians' 
services furnished as of the first day of that year.". 

(b) Report on Rates.— The Secretary of Health and Human Serv- 42 USC 1395/ 
ices shall report to Congress, by not later than March 1, 1989, on the note, 
adequacy of the amounts paid under title XVIII of the Socia^ 

Security Act for rural health clinic services provided by independent 
rural health clinics. 

(c) Effective Date.— The amendment made by subsection (a) shall 42 USC 1395/ 
apply to ser\aces furnished on or after April 1, 1988. note. 

SEC. 4068. PAYMENT FOR AMBULATORY SURGERY AT EYE, AND EYE AND 
EAR, SPECIALTY HOSPITALS. 

(a) In General.— Section 1833(i)(3)(B)(ii) of the Social Security Act 
(42 U.S.C. 13951(i)(3)(B)(ii)) is amended— 

(1) by striking "In" and inserting "Subject to the last sentence 
of this clause, in"; and 

(2) by adding at the end thereof the following: 

"In the case of a hospital that makes application to the Secretary 
and demonstrates that it specializes in eye services or eye and ear 
services (as determined by the Secretary), receives more than 30 
percent of its total revenues from outpatient services and was an eye 
specialty hospital or an eye and ear specialty hospital on October 1, 
1987, the cost proportion and ASC proportion in effect under 



101 STAT. 1330-114 PUBLIC LAW 100-203— DEC. 22, 1987 



subclauses (I) and (II) for cost reporting periods beginning in fiscal 
year 1988 shall remain in effect for cost reporting periods beginning 
in fiscal year 1989 or fiscal year 1990.". 

(b) Development of Prospective Payment Methodology for 
Outpatient Hospital Services. — Section 1135(d) of the Social Secu- 
rity Act (42 U.S.C. 1320b-5(d)) is amended— 

(1) by adding at the end of paragraph (3) the following: "In 
establishing such rates, the Secretary shall consider whether a 
differential payment rate is appropriate for speciality hos- 
pitals."; and 

(2) by adding at the end the following new paragraph: 

"(1) The Secretary shall solicit the views of the Prospective Pay- 
ment Assessment Commission in developing the systems under 
paragraphs (1) and (6), and shall include in the Secretary's reports 
under this subsection any views the Commission may submit with 
respect to such systems.". 
42 use 13951. (c) EFFECTIVE Date. — The amendments made by subsection (a) 

shall be effective as if included in the amendment made by section 
9343(a)(1)(B) of the Omnibus Budget Reconciliation Act of 1986. 

Subpart C — Eligibility and BeneHts Changes 

SEC. 4070. COVERAGE OF MENTAL HEALTH SERVICES. 

(a) Outpatient Services Under Part B.— Section 1833(c) of the 
42 use 1395/ Social Security Act (42 U.S.C. 13951(c)) is amended— 

note. (1) by striking "$312.50" and inserting "$1375.00"; and 

(2) by adding at the end thereof the following: 
"For purposes of this subsection, the term 'treatment' does not 
include brief office visits (as defined by the Secretary) for the sole 
purpose of prescribing or monitoring prescription drugs used in the 
treatment of such disorders.". 

(b) Partial Hospitauzation Coverage. — 

(1) Section 1861(sX2XB) of such Act (42 U.S.C. 1395x(s)(2)(B)) is 
amended by inserting "and partial hospitalization services in- 
cident to such services" before the semicolon. 

(2) Section 1861 of such Act (42 U.S.C. 1395x) is amended by 
adding at the end thereof the following new subsection: 

"(ff)(l) The term 'partial hospitalization services' means the items 
and services described in paragraph (2) prescribed by a physician 
and provided under a program described in paragraph (3) under the 
supervision of a physician pursuant to an individualized, written 
plan of treatment established and periodically reviewed by a physi- 
cian (in consultation with appropriate staff participating in such 
program), which plan sets forth the physician's diagnosis, the typey 
amount, frequency, and duration of the items and services provided 
under the plan, and the goals for treatment under the plan. 

"(2) The items and services described in this paragraph are — 
"(A) individual and group therapy with physicians or 
psychologists (or other mental health professionals to the extent 
authorized under State law), 
* "(B) occupational therapy requiring the skills of a qualified 
occupational therapist, 

"(C) services of social workers, trained psychiatric nurses, and 
other staff trained to work with psychiatric patients, 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-115 

"(D) drugs and biologicals furnished for therapeutic purposes 
(which cannot, as determined in accordance with regulations, be 
self-administered), 

"(E) individualized activity therapies that are not primarily 
recreational or diversionary, 

"(F) family counseling (the primary purpose of which is treat- 
ment of the individual's condition), 

"(G) patient training and education (to the extent that train- 
ing and educational activities are closely and clearly related to 
individual's care and treatment), 

"(H) diagnostic services, and 

"(I) such other items and services as the Secretary may 
provide (but in no event to include meals and transportation); 
that are reasonable and necessary for the diagnosis or active treat- 
ment of the individual's condition, reasonably expected to improve 
or maintain the individual's condition and functional level and to 
prevent relapse or hospitalization, and furnished pursuant to such 
guidelines relating to frequency and duration of services as the 
Secretary shall by regulation establish (taking into account accepted 
norms of medical practice and the reasonable expectation of patient 
improvement). 

' (3) A program described in this paragraph is a program which is 
hospital-based or hospital-affiliated (as defined by the Secretary) and 
which is a distinct and organized intensive ambulatory treatment 
service offering less than 24-hour-daily care.". 

(3) Section 1835(aX2) of such Act (42 U.S.C. 1395n(a)(2)) is 
amended — 

(A) by striking "and" at the end of subparagraph (D); 

(B) by striking the period at the end of subparagraph (E) 
and inserting "; and"; and 

(C) by inserting after subparagraph (E) the following new 
subparagraph: 

"(F) in the case of partial hospitalization services, (i) the 
individual would require inpatient psychiatric care in the 
absence of such services, (ii) an individualized, written plan 
for furnishing such services has been established by a 
physician and is reviewed periodically by a physician, and 
(iii) such services are or were furnished while the individual 
is or was under the care of a physician.". 

(4) Section 1833(c) of such Act, as amended by subsection (a), is 
further amended at the end thereof by inserting "or partial 
hospitalization services that are not directly provided by a 
physician" before the period. 

(c) Effective Date; Implementation. — 

(1) The amendment made by subsection (aXD shall apply with 42 use 1395/ 
respect to calendar years beginning with 1988; except that with note, 
respect to 1988, any reference in section 1833(c) of the Social 
Security Act, as amended by subsection (a), to "$1375.00" is 
deemed a reference to "$562.50". The amendment made by 
subsection (aX2) shall apply to services furnished on or after 
January 1, 1989. 

(2XA) The amendments made by subsection Ob) shall become 42 use i395x 
effective on the date of enactment of this Act. note. 

(B) The Secretary of Health and Human Services shall imple- 
ment the amendments made by subsection (h) so as to ensure 
that there is no additional cost to the medicare program by 
reason of such amendments. 



101 STAT. 1330-116 PUBLIC LAW 100-203— DEC. 22, 1987 



SEC. 4071. COVERAGE OF INFLUENZA VACCINE AND ITS ADMINISTRATION. 

(a) In General.— Section 1861(s)(10)(A) of the Social Security Act 
(42 U.S.C. 1395x(a)(10)(A)) is amended by inserting before the semi- 
colon the following: "and influenza vaccine and its administration". 

42 use 1395x (b) CONTINGENT EFFECTIVE DaTE; DEMONSTRATION PROJECT. — 

note. (1) The provisions of subsection (e) of section 4072 of this 

subpart shall apply to this section in the same manner as it 
applies to section 4072. 

(2) In conducting the demonstration project pursuant to para- 
graph (1), in order to determine the cost effectiveness of includ- 
ing influenza vaccine in the medicare program, the Secretary of 
Health and Human Services is required to conduct a demonstra- 
tion of the provision of influenza vaccine as a service for medi- 
care beneficiaries and to expend $25,000,000 each year of the 
demonstration project for this purpose. In conducting this dem- 
onstration, the Secretary is authorized to purchase in bulk 
influenza vaccine and to distribute it in a manner to make it 
widely available to medicare beneficiaries, to develop projects to 
provide vaccine in the same manner as other covered medicare 
services in large scale demonstration projects, including state- 
wide projects, and to engage in other appropriate use of moneys 
to provide influenza vaccine to medicare beneficiaries and 
evaluate the cost effectiveness of its use. In determining cost 
effectiveness, the Secretary shall consider the direct cost of the 
vaccine, the utilization of vaccine which might otherwise not 
have occurred, the costs of illnesses and nursing home days 
avoided, and other relevant factors, except that extended life for 
beneficiaries shall not be considered to reduce the cost effective- 
ness of the vaccine. 

SEC. 4072. PAYMENT FOR THERAPEUTIC SHOES FOR INDIVIDUALS WITH 
SEVERE DIABETIC FOOT DISEASE. 

(a) Coverage Under Part B. — Section 1861(s) of the Social Secu- 
rity Act (42 U.S.C. 1395x(s)) is amended— 

(1) by redesignating paragraphs (12) through (15) as para- 
graphs (13) through (16), respectively, 

(2) by striking out "and" at the end of paragraph (10), 

(3) by striking out the period at the end of paragraph (11) and 
inserting and", and 

(4) by inserting after paragraph (11) the following new para- 
graph: 

"(12) extra-depth shoes with inserts or custom molded shoes 
for an individual with diabetes, if — 

"(A) the physician who is managing the individual's dia- 
betic condition (i) documents that the individual has periph- 
eral neuropathy with evidence of callus formation, a history 
of pre-ulcerative calluses, a history of previous ulceration, 
foot deformity, or previous amputation, or poor circulation, 
and (ii) certifies that the individual needs such shoes under 
a comprehensive plan of care related to the individual's 
diabetic condition, 

"(B) the particular type of shoes are prescribed by a 
* podiatrist or other qualified physician (as established by the 

Secretary); and 

"(C) the shoes are fitted and furnished by a podiatrist or 
other qualified individual (such as a pedorthist or orthotist, 
as established by the Secretary) who is not the physician 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-117 

described in subparagraph (A) (unless the Secretary finds 
that the physician is the only such qualified individual in 
the area). 

(b) Limitation on Benefit.— Section 1833 of such Act (42 U.S.C. 42 USC 1395/. 
1395) is amended by inserting after subsection (e) the following new 
subsection: 

"(f)(1) In the case of shoes described in section 1861(s)(12) — 

"(A) no payment may be made under this part for the furnish- 
ing of more than one pair of shoes for any individual for any 
calendar year, and 

"(B) with respect to expenses incurred in any calendar year, 
no more than the limit established under paragraph (2) shall be 
considered as incurred expenses for purposes of subsections (a) 
and (b). 

Payment for shoes under this part shall be considered to include 
pavment for any expenses for the fitting of such shoes. 

'(2)(A) Except as provided by the Secretary under subparagraphs 
(B) and (C), the limit established under this paragraph — 

"(i) for the furnishing of one pair of custom molded shoes is 
$300; 

"(ii) for the furnishing of extra-depth shoes and inserts is — 
"(I) $100 for the pair of shoes itself, and 
"(II) $50 for inserts for a pair of shoes. 

"(B) The Secretary or a carrier may establish limits for shoes that 
are lower than the limits established under subparagraph (A) if the 
Secretary finds that shoes and inserts of an appropriate quality are 
readily available at or below such lower limits. 

"(C) For each year after 1988, each dollar amount under subpara- 
graph (A) or (B) (as previously adjusted under this subparagraph) 
shall be increased by the same percentage increase as the Secretary 
provides with respect to durable medical equipment for that year, 
except that if such increase is not a multiple of $1, it shall be 
rounded to the nearest multiple of $1. 

"(3) In this title, the term 'shoes' includes, except for purposes of 
subparagraphs (A)(ii) and (B) of paragraph (2), inserts for extra- 
depth shoes.". 

(c) Modification of Exclusion. — Section 1862(a)(8) of such Act (42 
U.S.C. 1395y(a)(8)) is amended by inserting ", other than shoes 
furnished pursuant to section 1861(s)(12)" before the semicolon. 

(d) Conforming Amendments. — Sections 1864(a), 1865(a), 
1902(a)(9)(C), and 1915(a)(l)(B)(ii)(I) of such Act (42 U.S.C. 1395aa(a), 
1395bb(a), 1396a(a)(9)(C), 1396n(a)(l)(B)(ii)(I)) are each amended by 
striking out "paragraphs (12) and (13)" and inserting "paragraphs 
(13) and (14)". 

(e) Contingent Effective Date; Demonstration Project. — 42 use I395x 

(1) The amendments made by this section shall become effec- ^^te. 
tive (if at all) in accordance with paragraph (2). 

(2) (A) The Secretary of Health and Human Services (in this 
paragraph referred to as the "Secretary"), shall establish a 
demonstration project to begin on October 1, 1988, to test the 
cost-effectiveness of furnishing therapeutic shoes under the 
medicare program to the extent provided under the amend- 
ments made by this section to a sample group of medicare 
beneficiaries. 

(BXi) The demonstration project under subparagraph (A) shall 
be conducted for an initial period of 24 months. Not later than Reports. 
October 1, 1990, the Secretary shall report to the Congress on 



101 STAT. 1330-118 PUBLIC LAW 100-203— DEC. 22, 1987 



the results of such project. If the Secretary finds, on the basis of 
existing data, that furnishing therapeutic shoes under the medi- 
care program to the extent provided under the amendments 
made by this section is cost-effective, the Secretary shall include 
such finding in such report, such project shall be discontinued, 
and the amendments made by this section shall become effec- 
tive on November 1, 1990. 

(ii) If the Secretary determines that such finding cannot be 
made on the basis of existing data, such project shall continue 
for an additional 24 months. Not later than April 1, 1993, the 
Secretary shall submit a final report to the Congress on the 
results of such project. The amendments made by this section 
shall become effective on the first day of the first month to 
begin after such report is submitted to the Congress unless the 
report contains a finding by the Secretary that furnishing 
therapeutic shoes under the medicare program to the extent 
provided under the amendments made by this section is not 
cost-effective (in which case the amendments made by this 
section shall not become effective). 

SEC. 4073. COVERAGE OF CERTIFIED NURSE MIDWIFE SERVICES. 

(a) Coverage of Services. — Section 1861(s)(2) of the Social Secu- 
rity Act (42 U.S.C. 1395x(s)(2)) is amended— 

(1) by striking **and" at the end of subparagraph (J); 

(2) by adding "and" at the end of subparagraph (K); and 

(3) by adding at the end thereof the following new subpara- 
graph: 

"(L) certified nurse-midwife services;". 

(b) Payment of Benefits.— 

(1) Section 1832(a)(2)(B) of such Act (42 U.S.C. 1395k(a)(2)(B)) is 
amended — 

(A) by striking "and" at the end of clause (ii); 

(B) by striking the semicolon at the end of clause (iii) and 
inserting a comma; and 

(C) by adding at the end thereof the following new clause: 

"(iv) certified nurse-midwife services; and". 
42USC 1395/. (2) Section 1833(a)(1) of such Act (42 U.S.C. 1395k(a)(l)) is 

amended — 

(A) by striking "and" at the end of clause (F); 

(B) by striking "services; and" in clause (G) and inserting 
"services,"; and 

(C) ^"^ by adding at the end thereof the following: "and (I) 
with respect to certified nurse-midwife services under sec- 
tion 1861(s)(2)(L), the amounts paid shall be the amount 
determined by a fee schedule established by the Secretary 
for the purposes of this subparagraph (but in no event more 
than 65 percent of the prevailing charge that would be 
allowed for the same service performed by a physician);". 

(3) Section 1833 of such Act (42 U.S.C. 13951) is amended by 
adding at the end the following new subsection: 
^ "(m) In the case of certified nurse-midwife services for which 
payment may be made under this part only pursuant to section 
1861(s)(2)(L), payment may only be made under this part for such 
services on an assignment-related basis.". 



Effective date. 



Reports. 
Effective date. 



Copy read "(D)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-119 

(c) Definition.— Section 1861 of such Act (42 U.S.C. 1395x) is 
amended by adding at the end thereof the following new subsection: 

"Certified Nurse-Midwife Services 

"(ffXD The term 'certified nurse-midwife services' means such 
services furnished by a certified nurse-midwife (as defined in para- 
graph (2)) and such services and supplies furnished as an incident to 
his service which the certified nurse-midwife is legally authorized to 
perform under State law (or the State regulatory mechanism pro- 
vided by State law) as would otherwise be covered if furnished by a 
physician or as an incident to a physician's service. 

"(2) The term 'certified nurse-midwife' means a registered nurse 
who has successfully completed a program of study and clinical 
experience meeting guidelines prescribed by the Secretary, or has 
been certified by an organization recognized by the Secretary, and 
performs services in the area of management of the care of mothers 
and babies throughout the maternity cycle.". 

(d) 2® Conforming Changes.— 

(1) Section 1905(aXlT) of such Act (42 U.S.C. 1396d(a)(17)) is 
amended by striking "as defined in subsection (m)" and insert- 
ing "as defined in section 1861(ff)". 

(2) Section 1905 of such Act (42 U.S.C. 1396d) is amended by 
striking subsection (m). 

(e) 3^ Effective Date.— The amendments made by this section 42 use I395k 
shall be effective with respect to services performed on or after July note. 

1, 1988. 

SEC. 4074. COVERAGE OF SOCIAL WORKER SERVICES FURNISHED BY A 
HEALTH MAINTENANCE ORGANIZATION TO ITS MEiMBERS. 

(a) In General.— Section 1861(sX2XHXii) of the Social Security Act 
(42 U.S.C. 1395x(sX2XHXii)) is amended— 

(1) by inserting "or by a clinical social worker (as defined in 
sulasection (ff))" after "clinical psychologist (as defined by the 
Secretary)"; and 

(2) by striking "incident to his services" and inserting "in- 
cident to such clinical psychologist's services or clinical social 
worker's services". 

(b) Clinical Social Worker Defined. — Section 1861 of such Act 
(42 U.S.C. 1395x) is amended by adding at the end the following new 
subsection: 

"Clinical Social Worker 

"(fi) The term 'clinical social worker' means an individual who — 
"(1) possesses a master's or doctor's degree in social work; 
"(2) after obtaining such degree has performed at least 2 years 
of supervised clinical social work; and 

"(3XA) is licensed or certified as a clinical social worker by the 
State in which the services are performed, or 

"(B) in the case of an individual in a State which does not 
provide for licensure or certification — 

"(i) has completed at least 2 years or 3,000 hours of post- 
master's degree supervised clinical social work practice 
under the supervision of a master's level social worker in 



^® Copy read "(c)". 
Copy read "(d)". 



101 STAT. 1330-120 PUBLIC LAW 100-203~-DEC. 22, 1987 



42 use 1395x 
note. 



42 use 1395x 
note. 



42 use 1395x 
note. 



42 use 1395x 
note. 



42 use 1395/. 



an appropriate setting (as determined by the Secretary), 
and 

"(ii) meets such other criteria as the Secretary estab- 
lishes.". 

(c) Effective Date. — The amendments made by this section shall 
be effective with respect to services performed on or after January 1, 
1988. 

SEC. 4075. CLARIFICATION OF COVERAGE OF DRUGS USED IN IMMUNO- 
SUPPRESSIVE THERAPY. 

(a) In General. — Section 1861(s)(2)(J) of the Social Security Act 
(42 U.S.C. 1395x(sX2)(J)) is amended by striking "immunosuppressive 
drugs" and inserting "prescription drugs used in immuno- 
suppressive therapy". 

(b) Effective Date. — The amendment made by subsection (a) 
shall apply to drugs dispensed on or after the date of the enactment 
of this Act. 

SEC. 4076. SERVICES OF A PHYSICIAN ASSISTANT. 

(a) Services Covered. — Section 1861(s)(2)(K) of the Social Security 
Act (42 U.S.C. 1395x(s)(2)(K)) is amended by inserting in a rural 
area (as defined in section 1886(d)(2)(D)) that is designated, under 
section 332(a)(1)(A) of the Public Health Service Act, as a health 
manpower shortage area," after "1905(c))". 

(b) Effective Date. — The amendments made by this section shall 
apply with respect to services furnished on or after January 1, 1989. 

SEC. 4077. PSYCHOLOGIST SERVICES IN CLINICS. 

(a) Coverage of Psychologists' Services Furnished at Rural 
Health Cunics.— 

(1) Section 1861(aa)(l)(B) of the Social Security Act (42 U.S.C. 
1395x(aa)(l)(B)) is amended by striking "physician assistant or 
by a nurse practitioner" and inserting "physician assistant or a 
nurse practitioner (as defined in paragraph (3)), or by a clinical 
psychologist (as defined by the Secretary), 

(2) The amendment made by paragraph (1) shall be effective 
with respect to services furnished on or after the date of enact- 
ment of this Act. 

(b) Direct Payment for Psychologists' Services Furnished at a 
Community Mental Health Center.— 

(1) Section 1861(sX2) of the Social Security Act (42 U.S.C. 
1395x(s)(2)), as amended, is amended — 

(A) by striking "and" at the end of subparagraph (K); 

(B) by adding "and" at the end of subparagraph (L); and 

(C) by adding at the end thereof the following new 
subparagraph: 

"(M) qualified psychologist services;". 

(2) Section 1832(a)(2)(B) of such Act (42 U.S.C. 1395k(aX2XB)) is 
amended — 

(A) by striking "and" at the end of clause (ii); 

(B) by striking the semicolon in clause (iii) and inserting a 
comma; and 

(C) bv adding at the end thereof the following new clause: 

*(iv) qualified psychologist services; and' . 

(3) Section 1833(aXl) of such Act (42 U.S.C. 1395k(aXl)) is 
amended — 

(A) by striking "and" at the end of subparagraph (G); 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-121 



(B) by striking "services; and" in subparagraph (H) and 
inserting ''services,"; 

(C) by adding "and" at the end of subparagraph (I); and 

(D) by adding at the end thereof the following new 
subparagraph: "(J) with respect to qualified psychologist 
services under section 1861(s)(2)(M), the amounts paid shall 
be the amount determined by a fee schedule established by 
the Secretary for the purposes of this subparagraph;". 

(4) The subsection added by section 407303)(3) of this subpart is 
amended by inserting "and in the case of qualified psychologists 
services for which payment may be made under this part only 
pursuant to section 1861(s)(2)(M)" after "1861(s)(2)(L)". 

(5) Section 1861 of such Act (42 U.S.C. 1395x) is amended by 
adding at the end thereof the following new subsection: 



42 use 1395/. 



"Qualified Psychologist Services 

"(gg) The term 'qualified psychologist services' means such serv- 
ices and such services and supplies furnished as an incident to his 
service furnished by a clinical psychologist (as defined by the Sec- 
retary) at a community mental health center (as such term is used 
in the Public Health Service Act) which the psychologist is legally 
authorized to perform under State law (or the State regulatory 
mechanism provided by State law) as would otherwise be covered if 
furnished by a physician or as an incident to a physician's 
service.".'*® 

(6) * ^ The amendments made by this subsection shall be 
effective with respect to services performed on or after July 1, 
1988. 

SEC. 4078. PROVISION OF OFFSITE COMPREHENSIVE OUTPATIENT RE- 
HABILITATION SERVICES. 

Section 1861(cc)(l) of the Social Security Act (42 U.S.C. 
1395x(cc)(l)) is amended by adding at the end thereof the following: 
"In the case of physical therapy, occupational therapy, and speech 
pathology services, there shall be no requirement that the item or 
service be furnished at any single fixed location if the item or 
service is furnished pursuant to such plan and payments are not 
otherwise made for the item or service under this title.". 

SEC. 4079. DEMONSTRATION PROJECTS TO PROVIDE PAYMENT ON A PRE- 
PAID, CAPITATED BASIS FOR COMMUNITY NURSING AND 
AMBULATORY CARE FURNISHED TO MEDICARE BENE- 
FICIARIES. 

(a) In General. — The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall enter into an 
agreement with not less than four eligible organizations submitting 
applications under this section to conduct demonstration projects to 
provide payment on a prepaid, capitated baisis for community nurs- 
ing and ambulatory care furnished to any individual entitled to 
benefits under part A and enrolled under part B of title XVIII of the 
Social Security Act (other than an individual medically determined 
to have end-stage renal disease) who resides in the geographic area 



Effective date. 
42 use 1395k 
note. 



42 use 1395mm 
note. 



''"Copy read "service.". 
* • Copy read "(5)". 



101 STAT. 1330-122 PUBLIC LAW 100-203— DEC. 22, 1987 



served by the organization and enrolls with such organization (in 
accordance with subsection (c)(2)). 

(b) Definitions of Community Nursing and Ambulatory Care 
AND Eligible Organization.— As used in this section: 

(1) The term "community nursing and ambulatory care" 
means the following services: 

(A) Part-time or intermittent nursing care furnished by 
or under the supervision of registered professional nurses. 

(B) Physical, occupational, or speech therapy. 

(C) Social and related services supportive of a plan of 
ambulatory care. 

(D) Part-time or intermittent services of a home health 
aide. 

(E) Medical supplies (other than drugs and biologicals) 
and durable medical equipment while under a plan of care. 

(F) Medical and other health services described in para- 
graphs (2)(H)(ii) and (5) through (9) of section 1861(s) of the 
Social Security Act. 

(G) Rural health clinic services described in section 
1861(aa)(l)(C) of such Act. 

(H) Certain other related services listed in section 
1915(c)(4)(B) of such Act to the extent the Secretary finds 
such services are appropriate to prevent the need for 
institutionalization of a patient. 

(2) The term "eligible organization" means a public or private 
entity, organized under the laws of any State, which meets the 
following requirements: 

(A) The entity (or a division or part of such entity) is 
primarily engaged in the direct provision of community 
nursing and ambulatory care. 

(B) The entity provides directly, or through arrangements 
with other qualified personnel, the services described in 
paragraph (1). 

(C) The entity provides that all nursing care (including 
services of home health aids) is furnished by or under the 
supervision of a registered nurse. 

(D) The entity provides that all services are furnished by 
qualified staff and are coordinated by a registered profes- 
sional nurse. 

(E) The entity has policies governing the furnishing of 
community nursing and ambulatory care that are devel- 
oped by registered professional nurses in cooperation with 
(as appropriate) other professionals. 

(F) The entity maintains clinical records on all patients. 

(G) The entity has protocols and procedures to assure, 
when appropriate, timely referral to or consultation with 
other health care providers or professionals. 

(H) The entity complies with applicable State and local 
laws governing the provision of community nursing and 
ambulatory care to patients. 

(I) The requirements of subparagraphs (B), (D), and (E) of 
section 1876(bX2) of the Social Security Act. 

(c) Agreements With Eugible Organizations To Conduct 
Demonstration Projects. — 



*^ Copy read "with Eugible Organizations to". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330- 

(1) The Secretary may not enter into an agreement with an 
eligible organization to conduct a demonstration project under 
thS section unless the organization meets the requirements of 
this subsection and subsection (d) with respect to members 
enrolled with the organization under this section. 

(2) The organization shall have an open enrollment period for 
the enrollment of individuals under this section. The duration 
of such period of enrollment and any other requirement 
pertaining to enrollment or termination of enrollment shall be 
specified in the agreement with the organization. 

(3) The organization must provide to members enrolled with 
the organization under this section, through providers and 
other persons that meet the applicable requirements of titles 
XVIII and XIX of the Social Security Act, community nursing 
and ambulatory care (as defined in subsection (b)(1)) which is 
generally available to individuals residing in the geographic 
area served by the organization, except that the organization 
may provide such members with such additional health care 
services as the members may elect, at their option, to have 
covered. 

(4) The organization must make community nursing and 
ambulatory care (and such other health care services as such 
individuals have contracted for) available and accessible to each 
individual enrolled with the organization under this section, 
within the area served by the organization, with reasonable 
promptness and in a manner which assures continuity. 

(5) Section 1876(cX5) of the Social Security Act shall apply to 
organizations under this section in the same manner as it 
applies to organizations under section 1876 of such Act. 

(6) The organization must have arrangements, established in 
accordance with regulations of the Secretary, for an ongoing 
quality assurance program for health care services it provides to 
such individuals under the demonstration project conducted 
under this section, which program (A) stresses health outcomes 
and (B) provides review by health care professionals of the 
process followed in the provision of such health care services. 

(7) Under a demonstration project under this section — 

(A) the Secretary could require the organization to pro- 
vide financial or other assurances (including financial risk- 
sharing) that minimize the inappropriate substitution of 
other services under title XVIII of such Act for community 
nursing services; and 

(B) if the Secretary determines that the organization has 
failed to perform in accordance with the requirements of 
the project (including meeting financial responsibility 
requirements under the project, any pattern of dispropor- 
tionate or inappropriate institutionalization) the Secretary 
shall, after notice, terminate the project. 

(d) Determination of Per Capita Payment Rates.— 

(1) The Secretary shall determine for each 12-month period in 
which a demonstration project is conducted under this section, 
and shall announce (in a manner intended to provide notice to 
interested parties) not later than three months before the begin- 
ning of such period, with respect to each eligible organization 
conducting a demonstration project under this section, a per 
capita rate of payment for each class of individuals who are 
enrolled with such organization who are entitled to benefits 



101 STAT. 1330-124 PUBLIC LAW 100-203— DEC 22, 1987 

under part A and enrolled under part B of title XVIII of the 
Social Security Act. 

(2) (A) Except as provided in paragraph (3), the per capita rate 
of payment under paragraph (1) shall be determined in accord- 
ance with this paragraph. 

(B) The Secretary shall define appropriate classes of members, 
based on age, disability status, and such other factors as the 
Secretary determines to be appropriate, so as to ensure actuar- 
ial equivalence. The Secretary may add to, modify, or substitute 
for such classes, if such changes will improve the determination 
of actuarial equivalence. 

(C) The per capita rate of payment under paragraph (1) for 
each such class shall be equal to 95 percent of the adjusted 
average per capita cost (as defined in subparagraph (D)) for that 
class. 

(D) For purposes of subparagraph (C), the term 'adjusted 
average per capita cost' means the average per capita amount 
that the Secretary estimates in advance (on the basis of actual 
experience, or retrospective actuarial equivalent based upon an 
adequate sample and other information and data, in a geo- 
graphic area served by an eligible organization or in a similar 
area, with appropriate adjustments to assure actuarial equiva- 
lence) would be payable in any contract year for those services 
covered under parts A and B of title XVIII of the Social Security 
Act and types of expenses otherwise reimbursable under such 
parts A and B which are described in subparagraphs (A) 
through (G) of subsection (bXD (including administrative costs 
incurred by organizations described in sections 1816 and 1842 of 
such Act), if the services were to be furnished by other than an 
eligible organization. 

(3) The Secretary shall, in consultation with providers, health 
policy experts, and consumer groups develop capitation-based 
reimbursement rates for such classes of individuals entitled to 
benefits under part A and enrolled under part B of the Social 
Security Act as the Secretary shall determine. Such rates shall 
be applied in determining per capita rates of pa3mient under 
paragraph (1) with respect to at lesist one eligible organization 
conducting a demonstration project under this section. 

(4XA) In the case of an eligible organization conducting a 
demonstration project under this section, the Secretary shall 
make monthly payments in advance and in accordance with the 
rate determined under paragraph (2) or (3), except as provided 
in subsection (eX3KB), to the organization for each individual 
enrolled with the organization. 

(B) The amount of payment under paragraph (2) or (3) may be 
retroactively adjusted to take into account any difference be- 
tween the actual number of individuals enrolled in the plan 
under this section and the number of such individuals estimated 
to be so enrolled in determining the amount of the advance 
pajmnient. 

(5) The pajmient to an eligible organization under this section 
for individuals enrolled under this section with the organization 
* and entitled to benefits under part A and enrolled under part B 
of the Social Security Act shall be made from the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund established under such Act in 
such proportions from each such trust fund as the Secretary 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330- 



deems to be fair and equitable taking into consideration benefits 
attributable to such parts A and B, respectively. 

(6) During any period in which an individual is enrolled with 
an eligible organization conducting a demonstration project 
under this section, only the eligible organization (and no other 
individual or person) shall be entitled to receive payments from 
the Secretary under this title for community nursing and 
ambulatory care (as defined in subsection (b)(1)) furnished to the 
individual. 

(e) Restriction on Premiums, Deductibles, Copayments, and 
Coinsurance.— 

(1) In no case may the portion of an eligible organization's 
premium rate and the actuarial value of its deductibles, coinsur- 
ance, and copayments charged (with respect to community nurs- 
ing and ambulatory care) to individuals who are enrolled under 
this section with the organization, exceed the actuarial value of 
the coinsurance and deductibles that would be applicable on the 
average to individuals enrolled under this section with the 
organization (or, if the Secretary finds that adequate data are 
not available to determine that actuarial value, the actuarial 
value of the coinsurance and deductibles applicable on the 
average to individuals in the area, in the State, or in the United 
States, eligible to enroll under this section with the organiza- 
tion, or other appropriate data) and entitled to benefits under 
part A and enrolled under part B of the Social Security Act, if 
they were not members of an eligible organization. 

(2) If the eligible organization provides to its members en- 
rolled under this section services in addition to community 
nursing and ambulatory care, election of coverage for such 
additional services shall be optional for such members and such 
organization shall furnish such members with information on 
the portion of its premium rate or other charges applicable to 
such additional services. In no case may the sum of— 

(A) the portion of such organization's premium rate 
charged, with respect to such additional services, to mem- 
bers enrolled under this section, and 

(B) the actuarial value of its deductibles, coinsurance, and 
copayments charged, with respect to such services to such 
members 

exceed the adjusted community rate for such services (as de- 
fined in section 1876(e)(3) of the Social Security Act). 

(3XA) Subject to subparagraphs (B) and (C), each agreement to 
conduct a demonstration project under this section shall provide 
that if— 

(i) the adjusted community rate, referred to in paragraph 
(2), for community nursing and ambulatory care covered 
under parts A and B of title XVIII of the Social Security 
Act (as reduced for the actuarial value of the coinsurance 
and deductibles under those parts) for members enrolled 
under this section with the organization, 

is less than 

(ii) the average of the per capita rates of payment to be 
made under subsection (dXD at the beginning of the 12- 
month period (as determined on such basis as the Secretary 
determines appropriate) described in such subsection for 
members enrolled under this section with the organization. 



101 STAT. 1330-126 PUBLIC LAW 100-203— DEC. 22, 1987 

the eligible organization shall provide to such members the 
additional benefits described in section 1876(gX3) of the Social 
Security Act which are selected by the eligible organization and 
which the Secretary finds are at least equal in value to the 
difference between that average per capita payment and the 
adjusted community rate (as so reduced). 

(B) Subparagraph (A) shall not apply with respect to any 
organization which elects to receive a lesser payment to the 
extent that there is no longer a difference between the average 
per capita payment and adjusted community rate (as so 
reduced). 

(C) An organization conducting a demonstration project under 
this section may provide (with the approval of the Secretary) 
that a part of the value of such additional benefits under 
subparagraph (A) be withheld and reserved by the Secretary as 
provided in section 1876(g)(5) of the Social Security Act. 

Contracts. (4) The provisions of paragraphs (3), (5), and (6) of section 

1876(g) of the Social Security Act shall apply in the same 
manner to agreements under this section as they apply to risk- 
sharing contracts under section 1876 of such Act, and, for this 
purpose, any reference in such paragraphs to paragraph (2) is 
deemed a reference to paragraph (3) of this subsection. 

(5) Section 1876(e)(4) of the Social Security Act shall apply to 
eligible organizations under this section in the same manner as 
it applies to eligible organizations under section 1876 of such 
Act. 

(f) Commencement and Duration of Projects. — Each dem- 
onstration project under this section shall begin not later than July 
1, 1989, and shall be conducted for a period of three years. 

(g) Report.— Not later than January 1, 1992, the Secretary shall 
submit to the Congress a report on the results of the demonstration 
projects conducted under this section. 

SEC. 4080. PART B PREMIUM. 

Section 1839 of the Social Security Act (42 U.S.C. 1395r) is 
amended — 

(1) in subsection (e), by striking "1989" each place it appears 
and inserting in lieu thereof "1990"; 

(2) in subsection (D(l), by striking "or 1987" and inserting in 
lieu thereof "1987, or 1988"; and 

(3) in subsection (f)(2), by striking "or 1988" and inserting in 
lieu thereof "1988, or 1989". 

Subpart D — Other Provisions 

SEC. 4081. SUBMISSION OF CLAIMS TO SUPPLEMENTAL INSURANCE 
CARRIERS. 

(a) In General.— Section 1842(h)(3) of the Social Security Act (42 
U.S.C. 1395u(h)(3)) is amended by inserting "(A)" after "(3)" and by 
adding at the end the following new subparagraph: 

"(B) The Secretary shall establish a procedure whereby an individ- 
ual enrolled under this part may assign, in an appropriate manner 
on the form claiming a benefit under this part for an item or service 
furnished by a participating physician or supplier, the individual's 
rights of payment under a medicare supplemental policy (described 
in section 1882(gXl)) in which the individual is enrolled. In the case 
such an assignment is properly executed and a claims determination 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-127 



is made by a carrier with a contract under this section, the carrier 
shall transmit to the private entity issuing the medicare supple- 
mental policy notice of such fact and including such information as 
the Secretary determines is generally provided to enable the entity 
to decide whether (and the amount of) any payment is due under the 
policy. The Secretary may enter into arrangements for the transmit- 
tal of such information to entities electronically. The Secretary shall 
impose user fees for the transmittal of information under this 
subparagraph, whether electronically or otherwise.". 

(b) Medio AP Poucy Standards. — Section 1882 of such Act (42 
U.S.C. 1395ss) is amended— 

(1) in subsection (b)(1) — 

(A) by amending subparagraph (B) to read as follows: 
"(B) includes requirements equal to or more stringent than 
the requirements described in paragraphs (2) and (3) of subsec- 
tion (c);", 

*3 (B) by adding "and" at the end of subparagraph (C), 
and 

(C) by inserting after subparagraph (C) the following 
new subparagraph: 
"(D) provides the Secretary periodically (but at least an- 
nually) with a list containing the name and address of the issuer 
of each such policy and the name and number of each such 
policy (including an indication of policies that have been pre- 
viously approved, newly approved, or withdrawn from approval 
since the pre\ious list was provided),"; 

(2) in subsection (c) — 

(A) by striking "and" at the end of paragraph (1), 

(B) by striking the period at the end of paragraph (2) and 
inserting "; and", and 

(C) by inserting after paragraph (2) the following new 
paragraph: 

"(3XA) accepts a notice under section 1842(hX3XB) as a claims 
form for benefits under such policy in lieu of any claims form 
otherwise required and agrees to make a payment determina- 
tion on the basis of the information contained in such claims 
form; 

"(B) where such a notice is received — 

"(i) provides notice to such physician or supplier and the 
beneficiary of the pa3mient determination, and 

"(ii) provides any appropriate payment directly to the 
participating physician or supplier involved; 
"(C) provides each enrollee at the time of enrollment a card 
listing the policy name and number and a single mailing ad- 
dress to which notices under section 1842(hX3XB) respecting the 
policy are to be sent; 

"(D) agrees to pay any user fees established under section 
1842(hX3XB) with respect to information transmitted to the 
issuer of the policy; and 

"(E) provides to the Secretary at least annually, for transmit- 
tal to carriers, a single mailing address to which notices under 
section 1842(hX3XB) respecting the policy are to be sent.". 

(c) Effective Dates. — (1) The amendinent made by subsection (a) Contracts, 
shall apply to contracts with carriers for claims for items and 42 USC 13 



Paragraphs (B) and (C) were indented wrong. 



101 STAT, 1330-128 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1395SS 
note. 



42 use 1395u 
note. 



Reports. 



42 use 1395ff 
note. 



services furnished by participating physicians and suppliers on or 
after January 1, 1989. 

(2)(A) The amendments made by subsection (b) shall apply to 
medicare supplemental policies as of January 1, 1989 (or, if ap- 
plicable, the date established under subparagraph (B)). 

(B) In the case of a State which the Secretary of Health and 
Human Services identifies as — 

(i) requiring State legislation (other than legislation appro- 
priating funds) in order for medical supplemental policies to be 
changed to meet the requirements of section 1882(c)(3) of the 
Social Security Act, and 

(ii) having a legislature which is not scheduled to meet in 
1988 in a legislative session in which such legislation may be 
considered, 

the date specified in this subparagraph is the first day of the first 
calendar quarter beginning after the close of the first legislative 
session of the State legislature that begins on or after January 1, 
1989, and in which legislation described in clause (i) may be 
considered. 

SEC. 4082. REVISION OF PART B HEARINGS. 

(a) Clarification of OBRA Amendment. — Section 1869(b)(3)(B) of 
the Social Security Act (42 U.S.C. 1395ff(b)(3)(B)) is amended by 
striking "chapter 5" and inserting "section 553". 

(b) Expedited Administrative Hearing Where Only Issues of 
Law.— Section 1869(b) of such Act (42 U.S.C. 1395ff(b)) is amended by 
adding at the end the following new paragraph: 

"(5) In an administrative hearing pursuant to paragraph (1), 
where the moving party alleges that there are no material issues of 
fact in dispute, the administrative law judge shall make an expe- 
dited determination as to whether any such facts are in dispute and, 
if not, shall determine the case expeditiously.". 

(c) Timely Carrier Hearings on Part B Appeals. — Section 
1842(b)(5) of such Act (42 U.S.C. 1395u(b)(5)) is amended— 

(1) by inserting "(A)" after "(5)", and 

(2) by adding at the end the following new subparagraph: 
"(B) The Secretary shall establish standards for evaluating car- 
riers* performance of reviews of initial carrier determinations and of 
fair hearings under paragraph (3)(C), under which a carrier is 
expected— 

"(i) to complete such reviews, within 45 days after the date of 
a request by an individual enrolled under this part for such a 
review, in 95 percent of such requests, and 

"(ii) to make a final determination, within 120 days after the 
date of receipt of a request by an individual enrolled under this 
part for a fair hearing under paragraph (3XC), in 90 percent of 
such cases.". 

(d) GAO Study. — The Comptroller General shall conduct a study 
concerning the cost effectiveness of requiring hearings with a car- 
rier under part B of title XVIII of the Social Security Act before 
having a hearing before an administrative law judge respecting 
carrier determinations under that part. The Comptroller General 
shall report to the Congress on the results of such study by not later 
than June 30, 1989. 

(e) Effective Dates. — (1) The amendment made by subsection (a) 
shall take effect on the date of the enactment of this Act. 



' Copy read "is amended is amended' 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-129 

(2) The amendment made by subsection (b) shall apply to requests 
for hearings filed after the end of the 60-day period beginning on the 
date of the enactment of this Act. 

(3) The amendments made by subsection (c) shall apply to evalua- 
tion of performance of carriers under contracts entered into or 
renewed on or after October 1, 1988. 

SEC. 4083. PROVISIONS RELATING TO PHYSICIAN PAYMENT REVIEW 
COMMISSION. 

(a) Revision of Appointment Process for the Physician Pay- 
ment Review Commission. — 

(1) In general. — Section 1845(a) of the Social Security Act 
(42 U.S.C. 1395w-l(a)(3)) is amended— 

(A) in paragraph (1), by striking "with expertise in the 
provision and financing of physicians' services" and insert- 
ing "with national recognition for their expertise in health 
economics, physician reimbursement, medical practice, and 
other related fields"; and 

(B) in paragraph (3), by striking the last sentence. 

(2) Effective date.— The amendment made by paragraph (1) 
shall apply to appointments made after the date of the enact- 
ment of this Act. 

Od) Treatment of Employees for Certain Purposes.— 

(1) In general.— Section 1886(e)(6)(D) of the Social Security 
Act (42 U.S.C. 1395ww(e)(6)(D)) is amended by adding at the end 
the following: "For purposes of pay (other than pay of members 
of the Commission) and employment benefits, rights, and privi- 
leges, all personnel of the Commission shall be treated as if they 
were employees of the United States Senate.". 

(2) Effective date. — The amendments made by paragraph (1) 
shall take effect on the date of the enactment of this Act. 

(c) Change in Date for Annual Report of Physician Payment 
Review Commission.— 

(1) Section 1845(b)(1) of such Act (42 U.S.C. 1395w-l(b)(l)) is 
amended by striking "March 1" and inserting "March 31". 

(2) The amendment made by paragraph (1) shall apply with 
respect to reports for years after 1987. 

SEC. 4084. TECHNICAL AMENDMENTS RELATED TO CERTIFIED REG- 
ISTERED NURSE anesthetists. 

(a) In General.— Section 1833(1) of the Social Security Act (42 
U.S.C. 13951(1)), as added by section 9320(e) of the Omnibus Budget 
Reconciliation Act of 1986, is amended — 

(1) in paragraph (2), by striking "1985" and inserting "1985 
and such other data as the Secretary determines necessary"; 
and 

(2) in paragraph (5XA), by striking "or group practice" each 
place it appears and inserting "group practice, or ambulatory 
surgical center". 

(b) Effective Date.— The amendments made by subsection (a) 42 USC 1395/ 
shall apply as if included in the amendment made by section ^^^^ 
9320(eX2) of the Omnibus Budget Reconciliation Act of 1986. 



*="'Copy read "of Social". 
** Copy read "General.". 



42 USC 1395u 
note. 



42 USC 1395W-1 
note. 



42 USC 1395WW 
note. 



42 USC 1395W-1 
note. 



19-139 0 - 88 - 5 ( 203) 



101 STAT. 1330-130 



PUBLIC LAW 100-203— DEC. 22, 1987 



SEC. 4085. MISCELLANEOUS AND TECHNICAL PROVISIONS. 

(a) Prompt Submittal of Data by Secretary. — Section 1845 of 
the Social Security Act (42 U.S.C. 1395w-l) is amended by adding at 
the end the following new subsection: 

"(f)(1) Not later than October 1st of each year (beginning with 
1988), the Secretary shall transmit to the Physician Payment 
Review Commission, to the Congressional Budget Office, and to the 
Congressional Research Service of the Library of Congress national 
data (known as the Part B Medicare Annual Data System) for the 
previous year respecting part B of this title. 

"(2) In order to ensure that the data are available for transmittal 
under paragraph (1) on a timely basis, the Secretary shall require, in 
the standards and criteria established under section 1842(b)(2), that 
carriers submit data for a year under the system referred to in 
paragraph (1) not later than July 1st of the following year. 

"(3) The Secretary, in consultation with the Physician Payment 
Review Commission, the Congressional Budget Office, and the 
Congressional Research Service of the Library of Congress, shall 
^ , establish and annually revise standards for the data reporting 

■ • system described in paragraph (1). 

"(4) The Secretary shall also provide to the entities described in 
paragraph (1) additional data respecting the program under this 
part as may be reasonably requested by them on an agreed-upon 
schedule. 

"(5) The Secretary shall develop, in consultation with the Physi- 
cian Payment Review Commission, the Congressional Budget Office, 
and the Congressional Research Service of the Library of Congress, 
a system for providing to each of such entities on a quarterly basis 
summary data on aggregate expenditures under this part by type of 
^, service and by type of provider. Such data shall be provided not later 
than 90 days after the end of each quarter (for quarters beginning 
with the calendar quarter ending on March 31, 1989).". 

Ob) Clarification of Penalties for Unassigned Laboratory 
Services.— 

, (1) In general. — Section 1833(h)(5) of the Social Security Act 

(42 U.S.C. 13951(h)(5)) is amended by adding at the end the 
following new subparagraph: 
"(D) If a person knowingly and willfully and on a repeated basis 
bills an individual enrolled under this part for charges for a clinical 
diagnostic laboratory test for which payment may only be made on 
an assignment-related basis under subparagraph (C), the Secretary 
may apply sanctions against the person in the same manner as the 
Secretary may apply sanctions against a physician in accordance 
with section 1842(j)(2).". 
42 use 1395/ (2) Effective date. — The amendment made by paragraph (1) 

shall apply to procedures performed on or after January 1, 1988. 

(c) Extension of Moratorium on Laboratory Payment Dem- 
onstration.— Section 9204(a) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985, as amended by section 9339(e) of the 

42 use I395ww Omnibus Budget Reconciliation Act of 1986, is amended by striking 
note. "January 1, 1988" and inserting "January 1, 1989". 

(d) Prompt Payment for Comprehensive Outpatient Re- 
habiutation Faciuties.— 

(1) Section 1816(c)(2)(C) of the Social Security Act (42 U.S.C. 
1395h(c)(2)(C)) is amended by striking "or hospice program" and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-131 



inserting "hospice program, comprehensive outpatient re- 
habilitation facility, or rehabilitation agency". 

(2)(A) The amendment made by paragraph (1) shall apply t® 
claims received on or after the date of enactment of this Act. 

(B) The Secretary of Health and Human Services shall pro- 
vide for such timely amendments to agreements under section 
1816, and regulations, to such extent as may be necessary to 
implement the amendment made by paragraph (1). 

(e) Capacity To'*^ Set Geographic Payment Limits.— The Sec- 
retary of Health and Human Services shall develop the capability to 
implement (for services furnished on or after January 1, 1989) 
geographic limits on charges and payments under part B of title 
XVIII of the Social Security Act for physicians' services based on 
statewide, regional, or national average (or percentile in a distribu- 
tion) of prevailing charges or payment amounts (weighted by fre- 
quency of services). Any such limits shall take into account adjust- 
ments for geographic differences in cost of practice and cost of 
living. 

(f) Delay in Effective Date for Estabushing Physician Identi- 
fier System. — Section 9202(g) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 is amended by striking "July 1, 1987" and 
inserting "October 1, 1988". 

(g) Date for Applying Civil Penauties for Improper Use of 
Assistants in Performing Cataract Surgery.— 

(1) Section 1842(k) of the Social Security Act (42 U.S.C. 
1395u(k)) is amended in paragraphs (1) and (2) by striking 
**(j)(2)" each place it appears and inserting "0)(2) in the case of 
surgery performed on or after March 1, 1987". 

(2) The amendment made by paragraph (1) shall be effective 
as if included in section 9307(c) of the Consolidated Omnibus 
Budget Reconciliation Act of 1985. 

(h) Utiuzation Screens for Physician Services Provided to 
Patients in Rehabiutation Hospitals.— 

(1) The Secretary of Health and Human Services shall estab- 
lish (in consultation with appropriate physician groups, includ- 
ing those representing rehabilitative medicine) a separate utili- 
zation screen for physician visits to patients in rehabilitation 
hospitals and rehabilitative units (and patients in long-term 
care hospitals receiving rehabilitation services) to be used by 
carriers under section 1842 of the Social Security Act in 
performing functions under subsection (a) of such section re- 
lated to the utilization practices of physicians in such hospitals 
and units. 

(2) Not later than 12 months after the date of enactment of 
this Act, the Secretary of Health and Human Services shall 
take appropriate steps to implement the utilization screen 
established under paragraph (1). 

(i) Technical Amendments. — 

(1) Section 1833(a) of the Social Security Act (42 U.S.C. 
13951(a)) is amended — 

(A) in paragraphs dXDXi) and (2XDXi), by striking, "on 
the basis of an assignment described in section 
18420>X3XBXii), under the procedure described in section 
1870(fXl)," and inserting "on an assignment-related basis"; 



42 use 1395h 
note. 



42 use 1395u 
note. 



42 use 1395WW 
note. 



42 use 1395u 
note. 

42 use 1395u 
note. 



Copy read "to". 



101 STAT. 1330-132 PUBLIC LAW 100-203— DEC. 22, 1987 

(B) in paragraph (1), by striking "and" before "(G)"; and 

(C) in subsection (b)(3)(A), by striking "on the basis of an 
assignment described in section 1842(b)(3)(B)(ii), under the 
procedure described in section 1870(f)(1)" and inserting "on 
an assignment-related basis". 

(2) Section 1833(h)(1)(C) of such Act (42 U.S.C. 13951(h)(1)(C)) is 
amended by inserting before the period the following: ", and 
ending on December 31, 1989. For such tests furnished on or 

' ' after January 1, 1990, the fee schedule shall be established on a 

nationwide basis". 

(3) Section 1833(h)(5)(A) of such Act (42 U.S.C. 13951(h)(5)(A)) is 
amended by striking "and" at the end of clause (i), by striking 
the period at the end of clause (ii) and inserting ", and", and by 
adding at the end the following new clause: 

"(iii) in the case of a clinical diagnostic laboratory test pro- 
vided under an arrangement (as defined in section 1861(w)(l)) 
made by a hospital, payment shall be made to the hospital.". 

(4) Section 1835(a)(2)(C) of such Act (42 U.S.C. 1395n(a)(2)(C)) is 
amended by striking the second comma at the end of clause (i). 

(5) Section 1842(b)(3)(C) of such Act (42 U.S.C. 1395u(b)(3)(C)) is 
V : ; ^ i amended by striking "not more than" and inserting "less than". 

(6) Section 1842(h)(5) of such Act (42 U.S.C. 1395u(h)(5)) is 
amended by striking "the" before "participation". 

(7) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986, section 1842(j)(l) of the Social 
Security Act (42 U.S.C. 1395u(j)(l)) is amended— 

(A) in subparagraph (C)(i), bv inserting "maximum allow- 
able" after "If the physician's' , 

(B) in subparagraph (C)(v), by striking "1987" and insert- 
ing "1986^, and 

(C) by adding at the end of subparagraph (C) the following 
new clause: 

"(vii) In the case of a nonparticipating physician who was a 
participating physician during a previous period, for the purpose of 
computing the physician's maximum allowable actual charge during 
the physician's period of nonparticipation, the physician shall be 
deemed to have had a maximum allowable actual charge during the 
period of participation, and such deemed maximum allowable actual 
charge shall be determined accordingly to clauses (i) through (vi).". 

(8) Paragraph (4) of section 1845(e) of the Social Security Act 
(42 U.S.C. 1395w-l(e)) is amended by moving the alignment of 
each of its provisions (including any clauses therein) 2 ems to 
the left. 

(9) Section 1861(b)(4) of such Act (42 U.S.C. 1395x(b)(4)) is 
amended by striking the comma before "anesthesia" and insert- 
ing "and" and by striking "certified" the second place it 
appears. 

(10) The heading of subsection (g) of section 1861 of such Act 
(42 U.S.C. 1395x) is amended to read as follows: 

"Outpatient Occupational Therapy Services". 

(11) Section 1861(s) of such Act (42 U.S.C. 1395x(s)), as 
amended by section 9367(a) of this Act, is amended by striking 
"which — " before paragraph (15) and all that follows through 



Copy read "insert". 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-133 



the end of paragraph (16) and inserting the following: "which 
would not be included under subsection (b) if it were furnished 
to an inpatient of a hospital.". 

(12) Section 1861(vX5)(A) of such Act (42 U.S.C. 1395x(v)(5)(A)) 
is amended by striking "section 1861(p)" and "section 1861(g)" 
and inserting "subsection (p)" and "subsection (g)", respectively. 

(13) The heading of subsection (bb) of section 1861 of such Act 
(42 U.S.C. 1395x) is amended to read as follows: 

"Services of a Certified Registered Nurse Anesthetist". 

(14) The heading of subsection (ee) of section 1861 of such Act 
(42 U.S.C. 1395x) is amended to read as follows: 



"Discharge Planning Process". 

(15) Section 1862(a)(1)(A) of such Act (42 U.S.C. 1395y(a)(l)(A)) 
is amended by striking "or (D)" and inserting "(D), or (E)". 

(16) Section 1862(a)(14) of such Act (42 U.S.C. 1395y(a)(14)) is 
amended by striking "an patient" and inserting "a patient". 

(17) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986, section 1866(g) of the Social 
Security Act (42 U.S.C. 1395cc(g)) is amended by striking "for a 
hospital outpatient service" and all that follows through 
"subsection (a)(1)(H)" and inserting "inconsistent with an 
arrangement under subsection (aXl)(H) or in violation of the 
requirement for such an arrangement". 

(18) Section 1869(a) of the Social Security Act (42 U.S.C. 
1395ff[a)) is amended by inserting "or a claim for benefits with 
respect to home health services under part B" before "shall". 

(19) Section 1869(bX2) of such Act (42 U.S.C. 1395ff(bX2)) is 
amended by inserting "and (IXD)" after "paragraph (IXC)" each 
place it appears. 

(20) Section 1875(cX3XB) of such Act (42 U.S.C. 139511(cX3XB)) 
is amended by striking "years 1987" and inserting "year 1987". 

(21) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986 — 

(A) section 9313(d)(3) of such Act is amended by striking 
"2 years after the date of the enactment of this Act" and 
inserting "January 1, 1990"; 

(B) section 9332(aX3) of such Act is amended by inserting 
before the period at the end the following: "or in increasing 
the proportion of total payments for physicians' services 
which are payments for such services rendered by partici- 
pating physicians"; 

(C) section 9335(jX2) of such Act is amended by inserting 
before the period at the end the following: "except that, 
until network administrative organizations are established 
under section 1881(c)(lXA) of the Social Security Act (as 
amended by subsection (dXD of this section), the distribu- 
tion of payments described in the last sentence of section 
188103X7) of such Act shall be made based on the distribu- 
tion of payments under section 1881 of such Act to network 
administrative organizations for fiscal year 1986"; and 

(D) section 9343 of such Act is amended— 

(i) amending subparagraph (A) of subsection (eX2) to 
read as follows: 



42 use 1395Z/ 
note. 

42 use 1395u 
note. 



42 use 1395rr 
note. 



42 use 1395/. 



101 STAT. 1330-134 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1395/ 
note. 



42 use 1395/ 
note. 



"(2)(A) Section 1833 (42 U.S.C. 13951) is amended— 

"(i) in subsection (a)(1)(F), by striking '(i)(3)' and inserting 
'(i)(4)', and 

"(ii) in subsection (bX3), by striking 'or under subsection 
(iX2)or(iX4)'."; 

(ii) in subsection (hX2), by striking "(d)" and inserting 
"(c)" and by adding at the end the following: "The 
amendments made by subsection (c) shall apply to serv- 
ices furnished after June 30, 1987."; and 

(iii) in subsection (hX4), by striking "(c)" and insert- 
ing "(d)". 

PART 4— PEER REVIEW ORGANIZATIONS 



42 use 1320C-2 
note. 



42 use 1320C-2 
note. 



Federal Register, 
publication. 



Federal Register, 
publication. 



SEC. 4091. CONTRACT PROVISIONS. 

(a) Extensions of Peer Review Contract Period.— 

(1) One-time extensions to permit staggering of expira- 
tion DATES. — 

(A) In general. — In order to permit the Secretary of 
Health and Human Services an adequate time to complete 
contract renewal negotiations with utilization and quality 
control peer review organizations under part B of title XI of 
the Social Security Act and to provide for a staggered 
period of contract expiration dates, notwithstanding section 
1153(c) of such Act, the Secretary may provide for exten- 
sions of existing contracts, but the total of such extensions 
may not exceed 24 months for any contract. 

(B) Effective date. — The amendment made by subpara- 
graph (A) shall apply to renewals occurring on or after the 
date of the enactment of this Act. 

(2) 3- YEAR CONTRACT PERIOD. — 

(A) Section 1153(cX3) of such Act (42 U.S.C. 1320c-2(c)(3)) 
is amended by striking "two" and "biennial" and inserting 
"three" and "triennial", respectively. 

(B) The amendment made by subparagraph (A) shall 
apply with respect to contracts entered into or renewed on 
or after the date of the enactment of this Act. 

(b) Contract Requirements.— 

(1) Section 1153 of the Social Security Act (42 U.S.C. 1320c-2) 
is amended by adding at the end the following new subsection: 

"(hXD The Secretary shall publish in the Federal Register any 
new policy or procedure adopted by the Secretary that affects 
substantially the performance of contract obligations under this 
section not less than 30 days before the date on which such policy or 
procedure is to take effect. This paragraph shall not apply to the 
extent it is inconsistent with a statutory deadline. 

"(2) The Secretary shall publish in the Federal Register the 
general criteria and standards used for evaluating the efficient and 
effective performance of contract obligations under this section and 
shall provide opportunity for public comment with respect to such 
criteria and standards. 

"(3) The Secretary shall regularly furnish each peer review 
organization with a contract under this section with a report that 
documents the performance of the organization in relation to the 
performance of other such organizations.". 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-135 



(2) Section 1153(e) of such Act (42 U.S.C. 1320c-2(e)) is 
amended — 

(A) by inserting "(1)" after "(e)"; 

(B) by striking "Contracting" and inserting "Except as 
provided in paragraph (2), contracting"; and 

(C) by adding at the end the following new paragraph: 
"(2) If a peer review organization with a contract under this 

section is required to carry out a review function in addition to any 
function required to be carried out at the time the Secretary entered 
into or renewed the contract with the organization, the Secretary 
shall, before requiring such organization to carry out such addi- 
tional function, negotiate the necessary contractual modifications, 
including modifications that provide for an appropriate adjustment 
(in light of the cost of such additional function) to the amount of 
reimbursement made to the organization.". 

(3) The amendments made by paragraphs (1) and (2) shall 
become effective on the date of enactment of this Act. 

SEC. 4092. PREFERENCE IN CONTRACTING WITH IN STATE ORGANIZA- 
TIONS. 

(a) In General.— Section 1153 of the Social Security Act (42 U.S.C. 
132()c-2), as amended by section 4091(b)(1) of this part, is further 
amended by adding at the end the following new subsection: 

"(iXD Notwithstanding any other provision of this section, the 
Secretary shall not renew a contract with any organization that is 
not an in-State organization (as defined in paragraph (3)) unless the 
Secretary has first complied with the requirements of paragraph (2). 

"(2XA) Not later than six months before the date on which a 
contract period ends with respect to an organization that is not an 
in-State organization, the Secretary shall publish in the Federal 
Register— 

"(i) the date on which such period ends; and 
"(ii) the period of time in which an in-State organization may 
submit a proposal for the contract ending on such date. 
"(B) If one or more qualified in-State organizations submits a 
proposal within the period of time specified under subparagraph 
(AXii), the Secretary shall not automatically renew the current 
contract on a noncompetitive basis, but shall provide for competition 
for the contract in the same manner as a new contract under 
subsection (b). 

"(3) For purposes of this subsection, an in-State organization is an 
organization that has its primary place of business in the State in 
which review will be conducted (or, which is owned by a parent 
corporation the headquarters of which is located in such State).". 

(b) Effective Date.— The amendment made by subsection (a) 
shall apply with respect to contracts scheduled to b<e renewed on or 
after the first day of the eighth month to begin after the date of 
enactment of this Act. 

SEC. 4093. REQUIRING REASONABLE NOTICE AND OPPORTUNITY FOR 
DISCUSSION PRIOR TO DENIAL OF CLAIM. 

(a) In General.— Section 1154(aX3) of the Social Security Act (42 
U.S.C. 1320c-3(aX3)) is amended to read as follows: 

"(3XA) Subject to subparagraph (B), whenever the organiza- 
tion makes a determination that any health care services or 
items furnished or to be furnished to a patient by any practi- 
tioner or provider are disapproved, the organization shall 



42 use 1320C-2 
note. 



Federal Register, 
publication. 



42 use 1320C-2 
note. 



101 STAT. 1330-136 PUBLIC LAW 100-203— DEC. 22, 1987 

promptly notify such patient and the agency or organization 
responsible for the payment of claims under title XVIII of this 
Act of such determination. 

"(B) The notification under subparagraph (A) shall not occur 
until 20 days after the date that the organization has — 

"(i) made a preliminary notification to such practitioner 
or provider of such proposed determination, and 

"(ii) provided such practitioner or provider an oppor- 
tunity for discussion and review of the proposed determina- 
tion. 

The discussion and review conducted under subparagraph (B)(ii) 
shall not affect the rights of a practitioner or provider to a formal 
reconsideration of a determination under this part (as provided 
under section 1155).". 
42 use 1320C-3 (b) EFFECTIVE D ATE.— The amendment made by subsection (a) 
"o^® shall apply with respect to determinations made on or after April 1, 

1988. 

SEC. 4094. PEER REVIEW NORMS AND EDUCATION. 

(a) Standards Appued by PROs.— Section 1154(aX6) of the Social 
Security Act (42 U.S.C. 1320c-3(aX6)) is amended by adding after and 
below subparagraph (B) thereof the following: 

"As a component of the norms described in clause (i) or (ii), the 
organization shall take into account the special problems associ- 
ated with delivering care in remote rural areas, the availability 
of service alternatives to inpatient hospitalization, and other 
appropriate factors (such as the distance from a patient's resi- 
dence to the site of care, family support, availability of proxi- 
mate alternative sites of care, and the patient's ability to carry 
out necessary or prescribed self-care regimens) that could ad- 
versely affect the safetv or effectiveness of treatment provided 
on an outpatient basis.' . 

(b) On-Site REViEW.—Section 1154(a) of such Act (42 U.S.C. 
1320c-3(a)) is amended by adding at the end the following new 
paragraph: 

Contracts. "(15) During each year of the contract entered into under 

section 1153(b), the organization shall perform significant on- 
site review activities, including on-site review at at least 20 
percent of the rural hospitals in the organization's area.". 

(c) Reports to Providers and Educational Activities.— 

(1)(A) Section 1154(a)(6) of such Act^^ (42 U.S.C. 1320c-3(a)(6)) 
is amended— 

(i) by redesignating subparagraphs (A) and (B) as clauses 
(i) and (ii), respectively, 

(ii) by inserting "(A)" after "(6)", and 

(iii) by adding at the end the following: 
"(B) The organization shall — 

"(i) offer to provide, several times each year, for a physi- 
cian representing the organization to meet (at a hospital or 
at a regional meeting) with medical and administrative 
staff of each hospital (the services of which are reviewed by 
the organization) respecting the organization's review of 
the hospital's services for which payment may be made 
under title XVIII, and 



*^ Copy read "1154(aX6) such Act". 



PUBLIC LAW 100-203~DEC. 22, 1987 101 STAT. 1330-137 



"(ii) publish (not less often than annually) and distribute 
to providers and practitioners whose services are subject to 
review a report that describes the organization's findings 
with respect to the types of cases in which the organization 
has frequently determined that (I) inappropriate or un- 
necessary care has been provided, (II) services were ren- 
dered in an inappropriate setting, or (III) services did not 
meet professionally recognized standards of health care.". 
(B) The amendments made by subparagraph (A) shall apply to 
contracts under part B of title XI of the Social Security Act 
entered into or renewed more than 6 months after the date of 
the enactment of this Act. 

(2)(A) Section 1154(a)(4)(B) of the Social Security Act (42 U.S.C. 
1320c-3(a)(4XB)) is amended— 

(i) by inserting before the period at the end of the first 
sentence the following: "and whether individuals enrolled 
with an eligible organization have adequate access to 
health care services provided by or through such organiza- 
tion (as determined, in part, by a survey of individuals 
enrolled with the organization who have not yet used the 
organization to receive such services). The contract of each 
organization shall also provide that with respect to health 
care provided by a health maintenance organization or 
competitive medical plan under section 1876, the organiza- 
tion shall maintain a beneficiary outreach program de- 
signed to apprise individuals receiving care under such 
section of the role of the peer review system, of the rights of 
the individual under such system, and of the method and 
purposes for contacting the organization"; and 

(ii) by striking "previous sentence" and inserting "pre- 
vious two sentences" 

(B) Section 1154(a)(7)(A) of such Act (42 U.S.C. 1320c- 
3(aX7XA)) is amended— 

(i) by inserting "(i)" after "(A)", 

(ii) by striking the semicolon and inserting "; and", and 

(iii) by adding at the end thereof the following new clause: 
"(ii) in the case of psychiatric and physical rehabilitation 

services, make arrangements to ensure that (to the extent 
possible) initial review of such services be made by a physi- 
cian who is trained in psychiatry or physical rehabilitation 
(as appropriate).". 

(C) The amendments made by this paragraph shall apply with 
respect to contracts entered into or renewed on or after the date 
of enactment of this Act. 

d) Peer Review Emphasis on Educational Activities.— 

(1) Section 1153(c) of such Act (42 U.S.C. 1320c-2(c)) is 
amended by adding after and below paragraph (8) the following: 
"In evaluating the performance of utilization and quality con- 
trol peer review organizations under contracts under this part, 
the Secretary shall place emphasis on the performance of such 
organizations in educating providers and practitioners (particu- 
larly those in rural areas) concerning the review process and 
criteria being applied by the organization.". 

(2) The amendment made by paragraph (1) shall apply to 
contracts under part B of title XI of the Social Security Act as of 
January 1, 1988. 



Contracts. 

42 use 1320C-3 

note. 



Contracts. 

42 use 1320C-3 

note. 



Contracts. 

42 use 1320C-2 

note. 



101 STAT. 1330-138 PUBLIC LAW 100-203— DEC. 22, 1987 



Contracts. 

42 use 1320C-5 

note. 



42 use 1320C-5 
note. 



42 use 1320C-5 
note. 



42 use 1320C-5 
note. 



(e) Te> ECOMMUNICATIONS DEMONSTRATION PROJECTS.— The Sec-^ 

retary of Health and Human Services shall enter into agreements 
with entities submitting applications under this subsection (in such 
form as the Secretary may provide) to establish demonstration ; 
projects to examine the feasability of requiring instruction and 
oversight of rural physicians, in lieu of imposing sanctions, through 
use of video communication between rural hospitals and teaching 
hospitals under this title. Under such demonstration projects, the 
Secretary may provide for payments to physicians consulted via 
video communication systems. No funds may be expended under the 
demonstration projects for the acquisition of capital items including 
computer hardware. 

SEC. 4095. PREEXCLUSION HEARINGS. 

(a) In General.— Section 1156(b) of the Social Security Act (42 
U.S.C. 1320C-503)) is amended by adding at the end the following 
new paragraph: 

"(5) Before the Secretary may effect an exclusion under paragraph 
(2) in the case of a provider or practitioner located in a rural health 
manpower shortage area (HMSA) or in a county with a population 
of less than 70,000, the provider or practitioner adversely affected by 
the determination is entitled to a hearing before an administrative 
law judge (described in section 2050b)) respecting whether the pro- 
vider or practitioner should be able to continue furnishing services 
to individuals entitled to benefits under this Act, pending comple- 
tion of the administrative review procedure under paragraph (4). If 
the judge does not determine, by a preponderance of the evidence, 
that the provider or practitioner will pose a serious risk to such 
individuals if permitted to continue furnishing such services, the 
Secretary shall not effect the exclusion under paragraph (2) until 
the provider or practitioner has been provided reasonable notice and 
opportunity for an administrative hearing thereon under paragraph 
(4).". 

Ob) Effective Date.— The amendment made by subsection (a) 
shall apply to determinations made by the Secretary of Health and 
Human Services under section 1156(b) of the Social Security Act on 
or after the date of the enactment of this Act. 

(c) Transition for Current Cases. — In the case of a practitioner 
or person— 

(1) for whom a notice of determination under section 1156(b) 
of the Social Security Act has been provided within 365 days 
before the date of the enactment of this Act, 

(2) who has not exhausted the administrative remedies avail- 
able under section 1156(b)(4) of such Act for review of the 
determination, and 

(3) who requests, within 90 days after the date of the enact- 
ment of this Act, a hearing established under this subsection, 

the Secretary of Health and Human Services shall provide for a 
hearing described in section 1156(bX5) of the Social Security Act (as 
amended by subsection (a) of this section). 

(d) Redeterminations in Certain Cases.— If, in hearing under 
subsection (c), the judge does not determine, by a preponderance of 
the evidence, that the provider or practitioner will pose a serious 
risk to individuals entitled to benefits under title XVIII of the Social 
Security Act if permitted to continue or resume furnishing such 
services, the Secretary shall not effect the exclusion (or shall sus- 
pend the exclusion, if previously effected) under paragraph (2) of 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-139 

I section 1156(b) of such Act until the provider or practitioner has 
been provided an administrative hearing thereon under paragraph 

fj (4) of such section, notwithstanding any failure by the provider or 

1^ practitioner to request the hearing on a timely basis. 

i (e) Report on Improvements in Procedures for Imposing Sanc- 
tions. — Not later than one year after the date of enactment of this 

j Act, the Secretary of Health and Human Services shall report to 

I Congress on the improved procedures for imposing sanctions against , . ^ 
: a practitioner or person under section 1156 of the Social Security 

J Act established through agreement by the Health Care Financing 
:| Administration, the American Association of Retired Persons, the 

II American Medical Association, and the Office of the Inspector 
General in the Department of Health and Human Services. The 
report shall set forth such improved procedures, describe the re- 

1 sponse of physicians and providers to the procedures, assess whether 
the procedures effect an appropriate balance between procedural 
fairness and the need for ensuring quality medical care, comment on 
the alternative provider-patient notification procedure contained in 

j the agreement, and recommend whether such procedures should 

I apply to institutional providers of health care services. 

' SEC. 4096. LIMITATION OF BENEFICIARY LIABILITY FOR SERVICES DIS- 
ALLOWED BY PEER REVIEW ORGANIZATIONS. 

(a) Part B Services. — 

(1) Section 1842 of the Social Security Act (42 U.S.C 1395u) is^ 
amended — 

(A) in subsection (b)(3Xii), by inserting "(and to refund 
amounts already collected)" after "agrees not to charge", 
and by striking "and (II)" and inserting ", (II) the physician 
or other person furnishing such service agrees not to charge 
(and to refund amounts already collected) for services for 
which payment under this title is denied under section 
1154(aX2) by reason of a determination under section 
1154(aXlXB), and (III)"; 

(B) in subsection (IXlXAXiii), by inserting "(I)" after "(iii)" 
and by inserting before the comma the following: "or (II) 
payment under this title for such services is denied under 
section 1154(aX2) by reason of a determination under sec- 
tion 1154(aXlXB)"; and 

(C) in subsection (IXIXC), by inserting "in the case de- 
scribed in subparagraph (AXiiiXD" after "to an individual". 

(2) Section 1870(f) of such Act (42 U.S.C. 1395gg(f)) is amended 
by striking "that the reasonable charge is the full charge for the 
services" each place it appears and inserting "to the terms 
specified in subclauses (I) and (II) of section 1842(bX3XBXii) with 
respect to the services". 

j (b) Indemnification.— Section 1879(b) of such Act (42 U.S.C. 
1 1395pp(b)) is amended— 

(1) in the first sentence, by striking ", subject to the deductible 
and coinsurance provisions of this title,", and 

(2) by adding at the end the following: "No item or service for 
which an individual is indemnified under this subsection shall 
be taken into account in applying any limitation on the amount 
of items and services for which payment may be made to or on 
behalf of the individual under this title.". 

(c) Patient Liability for Hospital Charges During Appeal of 
Discharge Notice.— 



101 STAT. 1330-140 PUBLIC LAW 100-203— DEC. 22, 1987 



(1) Section 1154(e)(2) of such Act (42 U.S.C. 1320c-3(e)(2)) is 
amended by adding at the end thereof the following: "If the 
hospital requests such a review, it shall also notify the patient 
that the review has been requested.". 

(2) Sections 1154(e)(3)(A)(i) (42 U.S.C. 1320c-3(e)(3)(A)(i)) and 
1154(e)(3)(B) (42 U.S.C. 1320c-3(e)(3)(B)) of such Act are each 
amended by inserting **or (2)" after "paragraph (1)". 

42 use 1320C-3 (d) EFFECTIVE Date.— The amendments made by this section shall 
^^^^ apply to services furnished on or after January 1, 1988. 

SEC. 4097. SEPARATE FUNDING LEVELS. 

(a) Aggregate Funding.— Section 1866(a)(l)(F)(i)(III) of the Social 
Security Act (42 U.S.C. 1395cc(a)(l)(F)(i)(III)) is amended— 

(1) by striking "1986" and inserting "1988"; and 

(2) inserting "and for any direct or administrative costs in- 
curred as a result of review functions added with respect to a 
subsequent fiscal year" after "inflation". 

(b) Payment.— Section 1866(a)(4)(C)(ii) of such Act (42 U.S.C. 
1395cc(a)(4)(C)(ii)) is amended to read as follows: 

"(ii) shall not be less in the aggregate for a fiscal year — 
"(I) in the case of hospitals, than the amount specified in 
paragraph (l)(F)(i)(III), and 

"(II) in the case of facilities and agencies, than the 
amounts the Secretary determines to be sufficient to cover 
the costs of such organizations' conducting the activities 
described in subparagraph (A) with respect to such facilities 
or agencies under part B of title XL". 
42 use 1395CC (c) EFFECTIVE Date. — The amendments made by this section 
"^^^ shall apply with respect to fiscal years beginning on or after 

October 1, 1988. 

Subtitle B — Medicaid 
PART 1— ELIGIBILITY AND BENEFITS 

SEC. 4101. MEDICAID BENEFITS FOR POOR CHILDREN AND PREGNANT 
WOMEN. 

(a) Medicaid Optional Coverage for Additional Low-Income 
Pregnant Women and Children.— 

(1) Section 1902(1) of the Social Security Act (42 U.S.C. 
1396a(l)) is amended— 

(A) in paragraph (2)— 

(i) by striking "(2) For purposes of paragraph (1)" and 
inserting "(2)(A) For purposes of paragraph (1) with 
respect to individuals described in subparagraph (A) or 
(B) of that paragraph", 

(ii) by striking "100 percent" and inserting "185 per- 
cent", and 

(iii) by adding at the end the following new subpara- 
graph: 

"(B) If a State elects, under subsection (aXlOXAXiiXIX), to cover 
individuals not described in subparagraph (A) or (B) of paragraph 
(1), for purposes of that paragraph and with respect to individuals 
not described in such subparagraphs the State shall establish an 
income level which is a percentage (not more than 100 percent, or, if 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-141 



less, the percentage established under subparagraph (A)) of the 
income official poverty line described in subparagraph (A)."; and 
(B) in paragraph (3)(D), by inserting "appropriate" after 
"applied is the". 

(2) Section 1902(e)(4) of such Act (42 U.S.C. 1396a(e)(4)) is 
amended by adding at the end the following new sentence: 
"During the period in which a child is deemed under the 
preceding sentence to be eligible for medical assistance, the 
medical assistance eligibility identification number of the 
mother shall also serve as the identification number of the 
child, and all claims shall be submitted and paid under such 
number (unless the State issues a separate identification 
number for the child before such period expires).". 

(3) The amendments made by this subsection shall apply to 
medical assistance furnished on or after July 1, 1988. 

(b) Allowing Accelerated Coverage of Children Up''* to 

y^GE 5 

(1) Section 1902(1X1) of such Act (42 U.S.C. 1396a(lXl)) is 
amended — 

(A) by inserting "and" at the end of subparagraph (B), 
and 

(B) by striking subparagraphs (C) through (F) and insert- 
ing the following: 

"(C) children born after September 30, 1983, and who have 
attained one year of age but have not attained 2, 3, 4, or 5 years 
of age (as selected by the State),". 

(2XA) Section 1902(1) of such Act is further amended— 

(i) in paragraph (3XC), by striking ", (C), (D), (E), or (F)" 
and inserting "or (C)", and 

(ii) in paragraph (4XBXii), by striking ", (D), (E), or (F)". 

(B) Section 1902(eX7) of such Act (42 U.S.C. 1396a(eX7)) is 
amended by striking ", (C), (D), (E), or (F)" and inserting 
"or (C)". 

(C) Section 9401(fX2) of the Omnibus Budget Reconciliation 
Act of 1986 is amended by striking "(A)" after "(2)" and by 
striking subparagraphs (B) through (D). 

(3) The amendments made by this subsection shall apply with 
respect to medical assistance furnished on or after July 1, 1988. 

(c) Coverage of Children Up to Age 8.— 

(1) Section 1905(nX2) of such Act (42 U.S.C. 1396d(nX2)) is 
amended by striking "is under 5 years of age" and inserting 
"has not attained the age of 7 (or any age designated by the 
State that exceeds 7 but does not exceed 8)". 

(2) Section 1902(1X1XC) of such Act, as amended by subsection 
0)X1XB), is further amended by striking "or 5 years" and insert- 
ing "5, 6, 7, or 8 years". 

(3XA) The amendments made by this subsection shall apply to 
medical assistance furnished on or after October 1, 1988. 

(B) For purposes of section 1905(nX2) of the Social Security 
Act (as amended by subsection (a)) for medical assistance fur- 
nished during fiscal year 1989, any reference to "age of 7" is 
deemed to be a reference to "£ige of 6". 

(d) Premium. — 



Effective date. 
42 use 1396a 
note. 



42 use 1396a 
note. 

Effective date. 
42 use 1396a 
note. 



Effective date. 
42 use 1396d 
note. 



**Copy read "up". 
*^ Copy read "up". 



101 STAT. 1330-142 PUBLIC LAW 100-203— DEC. 22, 1987 



(1) Section 1916 of the Social Security Act (42 U.S.C. 1396o) is 
amended — 

(A) in subsection (a)(1), by inserting "(except for a pre- 
mium imposed under subsection (c))" before the semicolon; 

(B) by redesignating subsections (c) and (d) as subsections 
(d) and (e), respectively; and 

(C) by inserting after subsection (b) the following new 
subsection: 

"(c)(1) The State plan of a State may at the option of the State 
provide for imposing a monthly premium (in an amount that does 
not exceed the limit established under paragraph (2)) with respect to 
an individual described in subparagraph (A) or (B) of section 
1 902(1 )(1) who is receiving medical assistance on the basis of section 
„ 1902(a)(10)(A)(ii)(IX) and whose family income (as determined in 
accordance with the methodology specified in section 1902(1)(3)) 
equals or exceeds 150 percent of the nonfarm income official poverty 
line (as defined by the Office of Management and Budget, and 
revised annually in accordance with section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981) applicable to a family of the size 
involved. 

"(2) In no case may the amount of any premium imposed under 
paragraph (1) exceed 10 percent of the amount by which the family 
income (less expenses for the care of a dependent child) of an 
individual exceeds 150 percent of the line described in paragraph (1). 

"(3) A State shall not require prepayment of a premium imposed 
pursuant to paragraph (1) and shall not terminate eligibility of an 
individual for medical assistance under this title on the basis of 
failure to pay any such premium until such failure continues for a 
period of not less than 60 days. The State may waive payment of any 
such premium in any case where the State determines that requir- 
ing such payment would create an undue hardship. 

"(4) A State may permit State or local funds available under other 
programs to be used for payment of a premium imposed under 
paragraph (1). Payment of a premium with such funds shall not be 
counted as income to the individual with respect to whom such 
payment is made.". 

Effective date. (2) The amendments made by paragraph (1) shall become 

42 use 13960 effective on July 1, 1988. 

® (e) Miscellaneous Provisions Relating to Services for Preg- 

nant Women and Children. — 

(1) Section 1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)) is 
' amended, in subdivision (VII) of the matter following subpara- 
graph (E), by striking "and postpartum" and inserting 
"postpartum, and family planning". 

(2) Section 1902(e)(5) of such Act (42 U.S.C. 1396a(e)(5)) is 
amended by striking "until the end of the 60-day period begin- 

V ning on the last day of her pregnancy" and inserting "through 

the end of the month in which the 60-day period Obeginning on 
V the last day of her pregnancy) ends". 

(3) Section 1902(1)(3)(E) of such Act (42 U.S.C. 1396a(l)(3)(E)) is 
amended by inserting after "title IV" the following: "(except to 
the extent such methodology is inconsistent with clause (D) of 
subsection (a)(17))". 

(4) Section 1902(1)(4)(A) of such Act (42 U.S.C. 1396a(lX4)(A)) is 
amended by striking "April 17, 1986" and inserting "July 1, 
1987". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-143 

(5) Section 1902(1X4) of such Act (42 U.S.C. 1396a(l)(4)) is 
amended by adding at the end the following new subparagraph: 

"(C) A State plan may not provide, in its election of the option of 
furnishing medical assistance to individuals described in paragraph 
(1), that such individuals must apply for benefits under part A of 
title IV as a condition of applying for, or receiving, medical assist- 
ance under this title.". 

(6) (A) The amendment made by paragraph (1) shall become Effective dates, 
effective on the date of enactment of this Act. 42 use I396a 

(B) The amendments made by paragraphs (2) and (3) shall be ® 
effective as if they had been included in the enactment of the 
Consolidated Omnibus Budget Reconciliation Act of 1985. 

(C) The amendment made by paragraph (4) shall apply to 
elections made on or after the enactment of this Act. 

(D) The amendment made by paragraph (5) shall apply as if 
included in the enactment of section 9401 of the Omnibus 
Budget Reconciliation Act of 1986. 

SEC. 4102. HOME AND COMMUNITY BASED SERVICES FOR THE ELDERLY. 

(a) In General.— 

(1) Section 1915 of the Social Security Act (42 U.S.C 1396n) is 
amended — 

(A) by transferring subsection (d) to the end of such 
section and redesignating it as subsection (h), and 

(B) by inserting after subsection (c) the following new 
subsection: ^ 

"(d)(1) Subject to paragraph (2), the Secretary shall grant a waiver 
to provide that a State plan approved under this title shall include 
as 'medical assistance' under such plan pajonent for part or all of 
the cost of home or community-based services (other than room and 
board) which are provided pursuant to a written plan of care to 
individuals 65 years of age or older with respect to whom there has 
been a determination that but for the provision of such services the 
individuals would be likely to require the level of care provided in a 
skilled nursing facility or intermediate care facility the cost of 
which could be reimbursed under the State plan. 

"(2) A waiver shall not be gramted under this subsection unless the 
State provides assurances satisfactory to the Secretary that— 

"(A) necessary safeguards (including adequate standards for 
provider participation) have been taken to protect the health 
and welfare of individuals provided services under the waiver 
and to assure financial accountability for funds expended with 
respect to such services; 
"(B) with respect to individuals 65 years of age or older who— 
"(i) are entitled to medical assistance for skilled nursing 
or intermediate care facility services under the State plan, 
"(ii) may require such services, and 

"(iii) may be eligible for such home or community-based 
services under such waiver, 
the State will provide for an evaluation of the need for such 
skilled nursing facility or intermediate care facility services; 
and 

"(C) such individuals who are determined to be likely to 
require the level of care provided in a skilled nursing facility or 
intermediate care facility are informed of the feasible alter- 



^° Copy read "paragraphs". 



101 STAT. 1330-144 PUBLIC LAW 100-203— DEC. 22, 1987 

natives to the provision of skilled nursing facility or intermedi- 
ate care facility services, which such individuals may choose if 
available under the waiver. 
Each State with a waiver under this subsection shall provide to the 
Secretary annually, consistent with a reasonable data collection i 
plan designed by the Secretary, information on the impact of the 
waiver granted under this subsection on the type and amount of 
medical assistance provided under the State plan and on the health 
and welfare of recipients. 

"(3) A waiver granted under this subsection may include a waiver 
of the requirements of section 1902(a)(1) (relating to statewideness), 
section 1902(a)(10)(B) (relating to comparability), and section 
1902(a)(10)(C)(i)(III) (relating to income and resource rules applicable 
in the community). Subject to a termination by the State (with 
notice to the Secretary) at any time, a waiver under this subsection 
shall be for an initial term of 3 years and, upon the request of a 
State, shall be extended for additional 5-year periods unless the 1 
Secretary determines that for the previous waiver period the assur- 
ances provided under paragraph (2) have not been met. A waiver 
may provide, with respect to post-eligibility treatment of income of 
all individuals receiving services under the waiver, that the maxi- | 
mum amount of the individual's income which may be disregarded I 
for any month is equal to the amount that may be allowed for that ; 
purpose under a waiver under subsection (c). i 
"(4) A waiver under this subsection may, consistent with para- j 
graph (2), provide medical assistance to individuals for case manage- i 
ment services, homemaker/home health aide services and personal | 
care services, adult day health services, respite care, and other j 
medical and social services that can contribute to the health and 1 
well-being of individuals and their ability to reside in a community- \ 
based care setting. 

"(5)(A) In the case of a State having a waiver approved under this 
subsection, notwithstanding any other provision of section 1903 to 
the contrary, the total amount expended by the State for medical 
assistance with respect to skilled nursing facility services, inter- 
mediate care facility services, and home and community-based serv- 
ices under the State plan for individuals 65 years of age or older 
during a waiver year under this subsection may not exceed the 
projected amount determined under subparagraph (B). 

"(B) For purposes of subparagraph (A), the projected amount 
under this subparagraph is the siim of the following: 

"(i) The aggregate amount of the State's medical assistance 
under this title for skilled nursing facility services and inter- 
mediate care facility services furnished to individuals who have 
attained the age of 65 for the base year increased by a percent- 
age which is equal to the lesser of 7 percent times the number of 
years beginning after the base year and ending before the j 
waiver year involved or the sum of— j 
* (I) the percentage increase (based on an appropriate 
market-basket index representing the costs of elements of 
such services) between the base year and the waiver year 
involved, plus 

'XII) the percentage increase between the base year and 
the waiver year involved in the number of residents in the 
State who have attained the age of 65, plus 

"(III) 2 percent for each year beginning after the base 
year and ending before the waiver year. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-145 



"(ii) The aggregate amount of the State's medical assistance 
under this title for home and community-based services for 
individuals who have attained the age of 65 for the base year 
increased by a percentage which is equal to the lesser of 7 
percent times the number of years beginning after the base year 
and ending before the waiver year involved or the sum of— 
"(I) the percentage increase (based on an appropriate 
market-basket index representing the costs of elements of 
such services) between the base year and the waiver year 
involved, plus 

"(II) the percentage increase between the base year and 
the waiver year involved in the number of residents in the 
State who have attained the age of 65, plus 

"(III) 2 percent for each year beginning after the base 
year and ending before the waiver year, 
"(iii) The Secretary shall develop and promulgate by regulation Regulations, 
(by not later than October 1, 1989)— 

"(I) a method, based on an index of appropriately weighted 
indicators of changes in the wages and prices of the mix of goods ' 
and services which comprise both skilled nursing facility serv- 
ices and intermediate care facility services (regardless of the 
source of payment for such services), for projecting the percent- 
age increase for purposes of clause (i)(I); 

"(II) a method, based on an index of appropriately weighted 
indicators of changes in the wages and prices of the mix of goods 
and services which comprise home and community-based serv- 
ices (regardless of the source of payment for such services), for 
projecting the percentage increase for purposes of clause (ii)(I); 
and 

"(III) a method for projecting, on a State specific basis, the 
percentage increase in the number of residents in each State 
who are over 75 years of age for any period. 
Effective on and after the date the Secretary promulgates the 
regulation under clause (iii), any reference in this subparagraph to 
the 'lesser of 7 percent' shall be deemed to be a reference to the 
'greater of 7 percent'. 
"(C) In this paragraph: 

"(i) The term 'home and community-based services' includes 
services described in sections 1905(aX7) and 1905(aX8), services 
described in subsection (c)(4XB), services described in paragraph 
(4XB), personal care services, and services furnished pursuant to 
a waiver under subsection (c). 

"(iiXD Subject to subclause (II), the term 'base year' means the 
most recent year (ending before the date of the enactment of 
this subsection) for which actual final expenditures under this 
title have been reported to, and accepted by, the Secretary. 

"(II) For purposes of subparagraph (C), in the case of a State 
that does not report expenditures on the basis of the age 
categories described in such subparagraph for a year ending 
before the date of the enactment of this subsection, the term 
'base year' means fiscsd year 1989. 

"(iii) The term 'intermediate care facility services' does not 
include services furnished in an institution certified in accord- 
ance with section 1905(d). 
"(6XA) A determination by the Secretary to deny a request for a 
waiver (or extension of wsdver) under this subsection shall be subject 
to review to the extent provided under section 1116(b). 



101 STAT. 1330-146 PUBLIC LAW 100-203— DEC. 22, 1987 

"(B) Notwithstanding any other provision of this Act, if the Sec- 
retary denies a request of the State for an extension of a waiver 
under this subsection, any waiver under this subsection in effect on 
the date such request is made shall remain in effect for a period of 
not less than 90 days after the date on which the Secretary denies 
such request (or, if the State seeks review of such determination in 
accordance with subparagraph (A), the date on which a final deter- 
mination is made with respect to such review).". 

Effective date. (2) The amendments made by paragraph (1) shall become 

42 use I396n effective on January 1, 1988. 

^ (h) Conforming Amendments.— 

(1) Section 1902(a)(10)(A)(ii)(VI) of such Act (42 U.S.C. 
1396a(a)(10)(A)(ii)(VI)) is amended by striking "section 1915(c)" 
each place it appears and inserting "subsection (c) or (d) of 
section 1915". 

(2) Section 1915(h) of such Act, as redesignated by subsection 
(a), is amended by striking "(c)" and inserting in lieu thereof "(c) 
or (d)". 

42 use I396n (c) EXTENSION OF Waiver.— In the case of a State which, as of 
^ December 1, 1987, has a waiver approved with respect to elderly 

individuals under section 1915(c) of the Social Security Act, which 
waiver is scheduled to expire before July 1, 1988, if the State notifies 
the Secretary of Health and Human Services of the State's intention 
to file an application for a waiver under section 1915(d) of such Act 
(as amended by subsection (a) of this section), the Secretary shall 
extend approval of the State's waiver, under section 1915(c) of such 
Act, on the same terms and conditions through September 30, 1988. 

SEC. 4103. PHYSICIANS' SERVICES FURNISHED BY DENTISTS. 

(a) Clarifying Coverage.— Section 1905(a)(5) of the Social Secu- 
rity Act (42 U.S.C. 1396d(a)(5)) is amended by inserting "(A)" after 
"(5)" and by inserting before the semicolon at the end the following: 
and (B) medical and surgical services furnished by a dentist 
(described in section 1861(r)(2)) to the extent such services may be 
performed under State law either by a doctor of medicine or by a 
doctor of dental surgery or dental medicine and would be described 
in subparagraph (A) if furnished by a physician (as defined in 
section 1861(r)(l))". 
42 use i396d (b) Effective Date.— 

(1) The amendment made by subsection (a) applies (except as 
provided under paragraph (2)) to payments under title XIX of 
the Social Security Act for calendar quarters beginning on or 
after January 1, 1988, without regard to whether or not final 
regulations to carry out such amendment have been promul- 
gated by such date. 

(2) In the case of a State plan for medical assistance under 
title XIX of the Social Security Act which the Secretary of 
Health and Human Services determines requires State legisla- 
tion (other than legislation appropriating funds) in order for the 
plan to meet the additional requirement imposed by the amend- 
ment made by subsection (a), the State plan shall not be re- 
garded as failing to comply with the requirements of such title 
solely on the basis of its failure to meet this additional require- 
ment before the first day of the first calendar quarter beginning 
after the close of the first regular session of the State legislature 
that begins after the date of enactment of this Act. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-147 

SEC. 4104. OPTIONAL MEDICAID COVERAGE OF INDIVIDUALS IN CERTAIN 
STATES RECEIVING ONLY OPTIONAL STATE SUPPLE- 
MENTARY PAYMENTS. 

Section 1902(a)(10)(A)(ii) of the Social Security Act (42 U.S.C. 
1396a(aX10)(A)(ii)) is amended— 

(1) by striking "or" at the end of subclause (IX) and inserting 
"or" at the end of subclause (X); and 

(2) by adding at the end the following new subclause: 

"(XI) who receive only an optional State supple- 
mentary payment based on need and paid on a 
regular basis, equal to the difference between the 
individual's countable income and the income 
standard used to determine eligibility for such 
supplementary payment (with countable income 
being the income remaining after deductions as 
established by the State pursuant to standards that 
are more restrictive than the standards for supple- 
mentary security income benefits under title XVI), 
which are available to all individuals in the State 
(but which may be based on different income stand- 
ards by political subdivision according to cost of 
living differences), and which are paid by a State 
that does not have an agreement with the Sec- 
retary under section 1616 or 1634.". 

SEC. 4105. CLARIFICATION OF COVERAGE OF CLINIC SERVICES FUR- 
NISHED TO HOMELESS OUTSIDE FACILITY. 

(a) In General.— Section 1905(a)(9) of the Social Security Act (42 

U.S.C. 1396d(a)(9)) is amended by inserting before the semicolon at ' • 

I I the end the following: ", including such services furnished outside 
I , the clinic by clinic personnel to an eligible individual who does not 

III reside in a permanent dwelling or does not have a fixed home or -r > 
' mailing address". 

(b) Effective Date.— The amendment made by subsection (a) 42 use I396d 
!, shall apply to services furnished on or after January 1, 1988, 

\ without regard to whether regulations to implement such amend- 
'j ment are promulgated by such date. 

1 SEC. 4106. MEDICALLY NEEDY INCOME LEVELS FOR CERTAIN 2-MEMBER 
COUPLES IN CALIFORNIA. 

For purposes of section 1903(D(1)(B) of the Social Security Act, for 
payments made to California on or after July 1, 1983, in the case of a 

I family consisting only of two individuals both of whom are adults 

II and at least one of whom is aged, blind, or disabled, the "highest 
I i amount which would ordinarily be paid to a family of the same size" 
I under the State's plan approved under part A of title IV of such Act 

I shall, at California's option, be the amount determined by the State 

I I agency to be the amount of the aid which would ordinarily be 
j payable under such plan to a family which consists of one adult and 
I two children and which is without any income or resources. Section 
' 1902(aX10)(C)(i)(III) of the Social Security Act shall not prevent 
j California from establishing (under the previous sentence) an ap- 
I plicable income limitation for families described in that sentence 

which is greater than the income limitation applicable to other 
families, if California has an applicable income limitation under 
I section 1903(0 of such Act which is equal to the maximum ap- 
; plicable income limitation permitted consistent with paragraph 



101 STAT. 1330-148 PUBLIC LAW 100-203— DEC. 22, 1987 

(1)(B) of such section for families other than those described in the 
previous sentence. 

PART 2— OTHER PROVISIONS 

SEC. 4111. INCREASING THE MAXIMUM ANNUAL MEDICAID PAYMENTS 
THAT MAY BE MADE TO THE COMMONWEALTHS AND TERRI- 
TORIES. 

(a) In General.— Subsection (c) of section 1108 of the Social 
Security Act (42 U.S.C. 1308) is amended to read as follows: 

"(c) The total amount certified by the Secretary under title XIX 
with respect to a fiscal year for payment to — 

"(1) Puerto Rico shall not exceed (A) $73,400,000 for fiscal year 
1988, (B) $76,200,000 for fiscal year 1989, and (C) $79,000,000 for 
fiscal year 1990 (and each succeeding fiscal year); 

"(2) the Virgin Islands shall not exceed (A) $2,430,000 for 
fiscal year 1988, (B) $2,515,000 for fiscal year 1989, and (C) 
$2,600,000 for fiscal year 1990 (and each succeeding fiscal year); 

"(3) Guam shall not exceed (A) $2,320,000 for fiscal year 1988, 
(B) $2,410,000 for fiscal year 1989, and (C) $2,500,000 for fiscal 
year 1990 (and each succeeding fiscal year); 

"(4) the Northern Mariana Islands shall not exceed (A) 
$636,700 for fiscal year 1988, (B) $693,350 for fiscal year 1989, 
and (C) $750,000 for fiscal year 1990 (and each succeeding fiscal 
year); and 

"(5) American Samoa shall not exceed (A) $1,330,000 for fiscal 
year 1988, (B) $1,390,000 for fiscal year 1989, and (C) $1,450,000 
for fiscal year 1990 (and each succeeding fiscal year).". 
42 use 1308 Ot)) Effective Date.— The amendment made by subsection (a) 

shall apply to payments for fiscal years beginning with fiscal year 
1988. 

42 use 1396a SEC. 4112. ADJUSTMENT IN MEDICAID PAYMENT FOR INPATIENT HOS- 
note. PITAL SERVICES FURNISHED BY DISPROPORTIONATE SHARE 

HOSPITALS. 

(a) Implementation of Requirement.— 

(1) A State's plan under title XIX of the Social Security Act 
shall not be considered to meet the requirement of section 
1902(a)(13)(A) of such Act (insofar as it requires payments to 
hospitals to take into account the situation of hospitals which 
serve a disproportionate number of low income patients with 
special needs), as of July 1, 1988, unless the State has submitted 
to the Secretary of Health and Human Services, by not later 
than such date, an amendment to such plan that— 

(A) specifically defines the hospitals so described (and 
includes in such definition any disproportionate share hos- 
pital described in subsection (b)(1) which meets the require- 
ment of subsection (d)), and 

(B) provides, effective for inpatient hospital services pro- 
vided not later than July 1, 1988, for an appropriate in- 
crease in the rate or amount of payment for such services 
provided by such hospitals, consistent with subsection (c). 

(2) (A) In order to be considered to have met such requirement 
* of section 1902(aX13)(A) as of July 1, 1989, the State must submit 

to the Secretary of Health and Human Services by not later 
than such date, the State plan amendment described in para- 
graph (1), consistent with subsection (c). 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-149 

(B) In order to be considered to have me- such requirement of 
section 1902(a)(13)(A) as of July 1, 1990, the State must submit 
to the Secretary of Health and Human Services by not later 
than such date, the State plan amendment described in para- 
graph (1), consistent with subsection (c). 
The Secretary shall, not later than June 30 of each year in which 
the State is required to submit an amendment under this subsection, 
review each such amendment for compliance with such requirement 
and by such date shall approve or disapprove each such amendment. 
If the Secretary disapproves such an amendment, the State shall 
immediately submit a revised amendment which meets such 
requirement. The requirement of this subsection may not be waived 
under section 1915(b)(4) of the Social Security Act. 
Ob) Hospitals Deemed Disproportionate Share.— 

(1) For purposes of subsection (a)(1), a hospital which meets 
the requirement of subsection (d) is deemed to be a dispropor- 
tionate share hospital if — 

(A) the hospital's medicaid inpatient utilization rate (as 
defined in paragraph (2)) is at least one standard deviation 
above the mean medicaid inpatient utilization rate for 
hospitals receiving medicaid payments in the State; or 

(B) the hospital's low-income utilization rate (as defined 
in paragraph (3)) exceeds 25 percent. 

(2) For purposes of paragraph (1)(A), the term "medicaid 
inpatient utilization rate" means, for a hospital, a fraction 
(expressed as a percentage), the numerator of which is the 
hospital's number of inpatient days attributable to patients who 
(for such days) were eligible for medical assistance under the 
State plan approved under title XIX of the Social Security Act 
in a period, and the denominator of which is the total number of 
the hospital's inpatient days in that period. 

(3) For purposes of paragraph (1)(B), the term "low-income 
utilization rate" means, for a hospital, the sum of— 

(A) the fraction (expressed as a percentage) — 

(i) the numerator of which is the sum (for a period) of 
(I) the total revenues paid the hospital for patient 
services under a State plan under title XIX of the 
Social Security Act and (II) the amount of the cash 
subsidies for patient services received directly from 
State and local governments, and 

(ii) the denominator of which is the total amount of 
revenues of the hospital for patient services (including 
the amount of such cash subsidies) in the period; and 

(B) a fraction (expressed as a percentage) — 

(i) the numerator of which is the total amount of the 
hospital's charges for inpatient hospital services which 
are attributable to charity care in a period, and 

(ii) the denominator of which is the total amount of 
the hospital's charges for inpatient hospital services in 
the hospital in the period. 

The numerator under subparagraph (B)(i) shall not include 
contractual allowances and discounts (other than for indigent 
patients not eligible for medical assistance under a State plan 
approved under title XIX of the Social Security Act), 
(c) Payment adjustment.— In order to be consistent with this 
subsection, a payment adjustment for a disproportionate share hos- 
pital must either — 



101 STAT. 1380-150 PUBLIC LAW 100-203— DEC. 22, 1987 



(1) be in an amount equal to the product of (A) the amount 
paid under the State plan to the hospital for operating costs for 
inpatient hospital services (of the kind described in section 
1886(a)(4)), and (B) the hospital's disproportionate share adjust- 
ment percentage (established under section 188()(d)(5)(F)(iv)); or 

(2) provide for a minimum specified additional payment 
amount (or increased percentage payment) and for an increase 
in such a payment amount (or percentage payment) in propor- 
tion to the percentage by which the hospital's medicaid utiliza- 
tion rate (as defined in subsection (b)(2)) exceeds one standard 
deviation above the mean medicaid inpatient utilization rate for 
hospitals receiving medicaid payments in the State; 

except that, for purposes of paragraphs (2)(A) and (2)(B), the pay- 
ment adjustment for a disproportionate share hospital is consistent 
with this subsection if the appropriate increase in the rate or 
amount of payment is equal to one-third of the increase otherwise 
applicable under subsection (c) (in the case of paragraph (2)(A)) and 
two-thirds of such increase (in the case of paragraph (2)(B)). 

(d) Requirement To ^ * Quaufy as Disproportionate Share Hos- 
pital. — 

(1) Except as provided in paragraph (2), no hospital may be 
defined or deemed as a disproportionate share hospital under a 
State plan under title XIX of the Social Security Act or under 
subsection (b) of this section unless the hospital has at least 2 
obstetricians who have staff privileges at the hospital and who 
have agreed to provide obstetric services to individuals who are 
entitled to medical assistance for such services under such State 
plan. 

1 (2)(A) Paragraph (1) shall not apply to a hospital — 

(i) the inpatients of which are predominantly individuals 
under 18 years of age; or 

(ii) which does not offer nonemergency obstetric services 
to the general population as of the date of the enactment of 
this Act. 

(B) In the case of a hospital located in a rural area (as defined 
for purposes of section 1886 of the Social Security Act), in 
paragraph (1) the term "obstetrician" includes any physician 
with staff privileges at the hospital to perform nonemergency 
obstetric procedures. 

(e) Special Rule. — A State plan shall be considered to meet the 
requirement of section 1902(a)(13)(A) (insofar as it requires pay- 
ments to hospitals to take into account the situation of hospitals 
which serve a disproportionate number of low income patients with 
special needs) without regard to the requirement of subsection (a) if 
the plan provided for payment adjustments for disproportionate 
share hospitals as of January 1, 1984, and if the aggregate amount of 
the payment adjustments under the plan for such hospitals is not 
less than the aggregate amount of such adjustments otherwise 
required to be made under such subsection. 

SEC. 4113. HMO-RELATED PROVISIONS. 

(a) Treatment of Garden State Health Plan.— 
42 use I80(5b. (1) Section 1903(m) of the Social Security Act (42 U.S.C. 

1396(m)) is amended — 

(A) by adding at the end the following new paragraph: 



*' Copy read "to". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-151 



"(6XA) For purposes of this subsection and section 1902(eX2XA), in Contracts, 
the case of the State of New Jersey, the term 'contract' shall be 
deemed to include an undertaking by the State agency, in the State 
plan under this title, to operate a program meeting all requirements 
of this subsection. 

"(B) The undertaking described in subparagraph (A) must 
provide — 

"(i) for the establishment of a separate entity responsible for 
the operation of a program meeting the requirements of this 
subsection, which entity may be a subdivision of the State 
agency administering the State plan under this title; 

"(ii) for separate accounting for the funds used to operate 
such program; 

"(iii) for setting the capitation rates and any other payment 
rates for services provided in accordance with this subsection 
using a methodology satisfactory to the Secretary designed to 
ensure that total Federal matching payments under this title 
for such services will be lower than the matching payments that 
would be made for the same services, if provided under the 
State plan on a fee for service basis to an actuarially equivalent 
population; and 

"(iv) that the State agency will contract, for purposes of Contracts, 
meeting the requirement under section 1902(aX30XC), with an 
organization or entity that under section 1154 reviews services 
provided by an eligible organization pursuant to a contract 
under section 1876 for the purpose of determining whether the 
quality of services meets professionally recognized standards of 
health care. 

"(C) The undertaking described in subparagraph (A) shall be Contracts, 
subject to approval (and annual re-approval) by the Secretary in the 
same manner as a contract under this subsection. 

"(D) The undertaking described in subparagraph (A) shall not be 
eligible for a waiver under section 1915(b)."; and 

(B) in paragraph (2XF), by striking all that precedes "a 
State plan may restrict" and inserting the following: 
5 2 "(E) In the case of— 

5^ "(i) a contract with an entity described in subparagraph (G) Contracts, 
or with a qualified health maintenance organization (as defined 
in section 1310(d) of the Public Health Service Act) which meets 
the requirement of subparagraph (AXii), or 

"(ii) a program pursuant to an undertaking described in 
paragraph (6) in which at leaist 25 percent of the membership 
enrolled on a prepaid basis are individuals who (I) are not 
insured for benefits under part B of title XVIII or eligible for 
benefits under this title, and (II) (in the case of such individuals 
whose prepayments are made in whole or in part by any 
government entity) had the opportunity at the time of enroll- 
ment in the program to elect other coverage of health care costs 
that would have been paid in whole or in part by any govern- 
montal entity,". 

(2) Section 1902(eX2XA) of such Act (42 U.S.C. 1396a(eX2XA)) is 
amended by striking "section 1903(mX2XG)" and inserting 
"paragraph (2XG) or (6) of section 1903(m)". 



" Copy read " '(F)". 
Ckjpy read "(i)". 



101 STAT. 1380-152 



PUBLIC LAW 100-208— DEC. 22, 1987 



(b) Medicaid Matching Rate for Quality Review of HMO 
Services. — 

(1) Section 1902(a)(30)(C) of such Act (42 U.S.C. 1396a(a)(30)(C)) 
is amended by inserting an entity which meets the require- 
ment' of section 1152, as determined by the Secretary," after 
"title XI)". 

(2) Section 1902(d) of such Act (42 U.S.C. 1396a(d)) is 
amended — 

Contracts. (i) by inserting after "contracts with" the following: "an 

entity which meets the requirements of section 1152, as 
determined by the Secretary, for the performance of the 
quality review functions described in subsection (a)(30)(C), 
or", and 

(ii) by striking "organization (or organizations)" each 
place it appears and inserting "such an entity or organiza- 
tion". 

(3) Section 1903(a)(3)(C) of such Act (42 U.S.C. 1396b(a)(3)(C)) is 
amended by inserting "or by an entity which meets the require- 
ments of section 1152, as determined by the Secretary," after 
"utilization and quality control peer review organization". 

(c) Freedom of Choice. — 

(1) Section 1902(a)(23) of such Act (42 U.S.C. 1396a(a)(23)) is 
amended — 

(A) by inserting "(A)" after "Guam, provide that", and 

(B) by inserting before the semicolon at the end the 
following: ", and (B) an enrollment of an individual eligible 
for medical assistance in a primary care case-management 
system (described in section 1915(b)(1)), a health mainte- 
nance organization, or a similar entity shall not restrict the 
choice of the qualified person from whom the individual 
may receive services under section 1905(a)(4)(C)". 

(2) Section 1902(e)(2)(A) of such Act (42 U.S.C. 1396a(e)(2)(A)) is 
amended by striking "but only" and inserting "but, except for 
benefits furnished under section 1905(a)(4)(C), only". 

Effective date. (3) The amendments made by this subsection shall apply to 

42 use 1396a services furnished on and after July 1, 1988. 

"^^^ (d) Technical Amendments. — 

(1) Section 1903(m)(2)(F) of such Act (42 U.S.C. 1396b(m)(2)(F)) 
is amended by striking "subparagraph (G)" and inserting "sub- 
paragraphs (E) or (G)". 

(2) Section 1902(e)(2)(A) of such Act (42 U.S.C. 1396a(e)(2)(A)) is 
amended by striking "section 1903(m)(2)(G)" and inserting 
"subparagraph (B)(iii), (E), or (G) of section 1903(m)(2)". 

(e) Continued Eugibility and Restriction on Disenrollment 
Without Cause for Metropolitan Health Plan HMO. — For pur- 
poses of sections 1902(e)(2)(A) and 1903(m)(2)(F) of the Social Security 
Act, the Metropolitan Health Plan HMO operated by the New York 
City public hospitals shall be treated in the same manner as a 
qualified health maintenance organization (as defined in section 
1310(d) of the Public Health Service Act). 

SEC. 4114. MEDICAID WAIVER FOR HOSPICE CARE FOR AIDS PATIENTS. 

Section 1905(oXl) of the Social Security Act (42 U.S.C. 1396d(o)(l)) 
is amended — 

(1) by inserting "(A)" after "(1)"; 

(2) by striking "The" and inserting "Subject to subparagraph 
(B), the"; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-153 

(3) by adding at the end the following new subparagraph: 
"(B) For purposes of this title only, with respect to the definition 
of hospice program under section 1861(dd)(2), the Secretary may 
allow an agency or organization to make the assurance under 
subparagraph (AXiii) of such section without taking into account 
any individual who is afflicted with acquired immunodeficiency 
syndrome.". 

SEC. 4115. STATE DEMONSTRATION PROJECTS. 

(a) Extension of Arizona Health Care Demonstration 
Project.— 

(1) Notwithstanding any limitations contained in section 1115 
of the Social Security Act, but subject to paragraphs (2) and (3) 
of this subsection, the Secretary of Health and Human Services 
(in this subsection referred to as the "Secretary") upon applica- 
tion shall renew until September 30, 1989, approval of dem- 
onstration project number ll-P-98239/9-05 ("Arizona Health 
Care Cost Containment System — AHCCCS— A statewide ap- 
proach to cost effective health care financing"), including all 
waivers granted by the Secretary under such section 1115 as of 
September 30, 1987. 

(2) The Secretary's renewed approval of the project under 
paragraph (1) shall — 

(A) subject to paragraph (3) be on the same terms and 
conditions that existed between the applicant and the Sec- 
retary as of September 30, 1987 ; and 

(B) remain in effect through September 30, 1989, unless 
the Secretary finds that the applicant no longer complies 
with such terms and conditions. 

(3) Nothing in this subsection shall be construed to prohibit or 
require the Secretary from granting additional waivers to the 
applicant — 

(A) for coverage of additional optional groups, and 

(B) for coverage of long-term care and other services 
which were not covered as of September 30, 1987. 

0)) New York State Pilot Program for Prenatal, Maternity, 
lii and Newborn Care. — 

'I (1) Upon application by the State of New York and approval 
by the Secretary of Health and Human Services (in this subsec- 
tion referred to as the "Secretary"), the State of New York (in 
this subsection referred to as the "State") may conduct a dem- 
onstration project in accordance with this subsection for the 
purpose of testing its Prenatal/Maternity/Newborn Care Pilot 
Program (in this subsection referred to as the "Program"), as 
the Program is set forth in the Prenatal Care Act of 1987 
(enacted by the State in February 1987), as an alternative to 
existing Federal programs. 

(2) Under the demonstration project conducted under this 
subsection — 

(A) any individual who receives benefits under the Pro- 
gram shall not receive any of such benefits under the plan 
of the State under title XIX of the Social Security Act; and 

(B) the Secretary shall make payments to the State with 
respect to individuals receiving benefits under the Program 
in the same amounts as would be payable for such benefits 
under title XIX of the Social Security Act if such individ- 



101 STAT. 1330-154 PUBLIC LAW 100-203— DEC. 22, 1987 



uals were receiving such benefits under such title (as deter- 
mined by the Secretary). 

(3) The Secretary may (with respect to the demonstration 
project under this subsection) waive compliance with any 
requirement contained in section 1902(a)(1), 1902(a)(10)(B), 
1902(a)(17XD), 1902(a)(23), 1902(n)(30), or 1903(f) of the Social 
Security Act which (if applied) would prevent the State from 
carrying out the project, effectively achieving its purpose, or 
receiving payments in accordance with paragraph (2)(B). 

(4) As a condition of approval of the demonstration project 
under this subsection, the State shall provide assurances satis- 
factory to the Secretary that — 

(A) the State will continue to make benefits available 
under title XIX of the Social Security Act to all pregnant 
women entitled to receive benefits under such title to the 
extent such benefits are not provided under the Program; 
and 

(B) the State has in effect a quality assurance mechanism 
to ensure the quality and accessibility of the services fur- 
nished under the program. 

(5) (A) The demonstration project under this subsection shall 
be conducted for a period not to exceed three years. 

Reports. (B) The Secretary shall conduct an evaluation of the dem- 

onstration project under this subsection and shall report the 
results of such evaluation to the Congress not later than one 
year after completion of the project, 
(c) Waivers for Family Independence Program.— Upon ap- 
proval of the demonstration project relating to the Family Independ- 
ence Program in the State of Washington and with respect to such 
project, the Secretary of Health and Human Services shall waive 
compliance with any requirements of sections 1902(a)(1), 1916, and 
1924 of the Social Security Act, but only to the extent necessary to 
enable the State to carry out the project as enacted by the State of 
Washington in May 1987. 

SEC. 4116. WAIVER AUTHORITY UNDER THE MEDICAID PROGRAM FOR 
THE NORTHERN MARIANA ISLANDS. 

Section 1902(j) of the Social Security Act (42 U.S.C. 1396a(j)) is 
amended — 

(1) by inserting "and the Northern Mariana Islands" after 
''American Samoa" the first place it appears; and 

(2) by inserting "or the Northern Mariana Islands" after 
"American Samoa" the second place it appears. 

42 use i396b SEC. 4117, DELAY QUALITY CONTROL SANCTIONS FOR MEDICAID. 

The Secretary of Health and Human Services shall not, prior to 
July 1, 1988, implement any reductions in payments to States 
pursuant to section 1903(u) of the Social Security Act (or any 
provision of law described in subsection (c) of section 133 of the Taix 
Equity and Fiscal Responsibility Act of 1982). 

SEC. 4118. TECHNICAL AND MISCELLANEOUS AMENDMENTS. 

(a) Section 2176 Waiver Technicai^.— 

(1) Section 1915(c)(3) of the Social Security Act (42 U.S.C. 
1396n(cX3)) is amended by striking "and section 1902(a)(10)(B) 
(relating to comparability)" and inserting ", section 
1902(aX10)(B) (relating to comparability), and section 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-155 



1902(aX10)(C)(i)(III) (relating to income and resource rules ap- 
plicable in the community)". 

(2) The amendment made by paragraph (1) shall be effective 
as if included in the enactment of the Omnibus Budget Rec- 
onciliation Act of 1986. 

(b) Increase in Number of Individuals Who May be Served 
Under Model Home and Community-Based Services Waivers.— 
Section 1915(c) of the Social Security Act (42 U.S.C. 1396n(c)) is 

i I amended by adding at the end the following new paragraph: 

"(10) No waiver under this subsection shall limit by an amount 
less than 200 the number of individuals in the State who may 
receive home and community-based services under such waiver.". 

(c) ICatie Beckett Technical 

(1) Section 1902(e)(3)(C) of such Act (42 U.S.C. 1396a(e)(3)(C)) is 
amended by striking "to have a supplemental security income 
(or State supplemental) payment made with respect to him 
under title XVI" and inserting "for medical assistance under 
the State plan under this title". 

(2) The amendment made by paragraph (1) shall be effective 
as if it were included in section 134 of the Tax Equity and Fiscal 
Responsibility Act of 1982. 

(d) Organ Transplant Technical.— 

(1) Section 1903(i) of the Social Security Act (42 U.S.C. 
1396b(i)) is amended — 

(A) in paragraph (1), by striking the period at the end and 
inserting "; or", and 

(B) by adding at the end the following new sentence: 
"Nothing in paragraph (1) shall be construed as permitting 
a State to provide services under its plan under this title 
that are not reasonable in amount, duration, and scope to 
achieve their purpose.". 

(2) The amendments made by paragraph (1) shall be effective 
as if included in the enactment of section 9507 of the Consoli- 
dated Omnibus Budget Reconciliation Act of 1985. 

(e) Civil Money Penalty and Exclusion Clarifications. — 

(1) Section 1128A(a)(l) of the Social Security Act (42 U.S.C. 
1320a-7(aXl)), as amended by section 3(aXl) of the Medicare and 
Medicaid Patient and Program Protection Act of 1987 (Public 
Law 100-93), is amended by striking "or has reason to know" 
each place it appears and inserting "or should know". 

(2) Section 1128(d)(3XB) of the such Act (42 U.S.C. 1320a- 
6(dX3XB)), as amended by section 2 of the Medicare and Medic- 
aid Patient and Program Protection Act of 1987 (Public Law 
100-93), is amended— 

(A) by inserting "(i)" after "(B)", and 

(B) by adding at the end the following new clause: 

"(ii) A State hesdth care program may provide for a period of 
exclusion which is longer than the period of exclusion under a 
program under title XVIII.". 

(3) The emiendment made by paragraph (1) shall apply to 
activities occurring before, on, or after the date of the enact- 
ment of this Act. 

(f) Incorporation of Certain Provisions Relating to Indian 
J) iriEALTH Service Facilities.- 



42 use 1396n 
note. 



42 use 1396a 
note. 



Effective date. 
42 use 1396b 
note. 



42 use 1320a-7a. 



42 use 1320a-7. 



Effective date. 
42 use 1320a-7a 
note. 



'* Copy read "who may". 



101 STAT. 1330-156 PUBLIC LAW 100-203— DEC. 22, 1987 



Effective date. 
42 use 1396j 
note. 



100 Stat. 2063. 



Effective date. 



Effective date. 
42 use 1396a 
note. 



Effective date. 
42 use 1396n 
note. 

42 use 1396n 
note. 



(1) Section 1911 of the Social Security Act (42 U.S.C. 1396j), as 
amended by section 4111(g)(8) of this title, is amended — 

(A) by striking "or nursing facility" each place it appears 
and inserting nursing facility, or any other type of 
facility which provides services of a type otherwise covered 
under the State plan"; and 

(B) by adding at the end the following new subsection: 
"(c) The Secretary is authorized to enter into agreements with the 

State agency for the purpose of reimbursing such agency for health 
care and services provided in Indian Health Service facilities to 
Indians who are eligible for medical assistance under the State 
plan.".ss 

(2) The amendments made by paragraph (1) shall apply to 
health care services performed on or after the date of the 
enactment of this Act. 

(g) Frail Elderly Demonstration Project Waivers.— 

(1) Section 9412(b)(2) of the Omnibus Budget Reconciliation 
Act of 1986 is amended— 

(A) in subparagraph (A), by inserting before the period at 
the end the following: including permitting the organiza- 
tion to assume progressively (over the initial 3-year period 
of the waiver) the full financial risk", and 

(B) in subparagraph (B), by striking "be awarded a grant 
from the Robert Wood Johnson Foundation" and insert 
"participate in an organized initiative to replicate the find- 
ings of the On Lok long-term care demonstration project 
(described in section 603(c)(1) of the Social Security Amend- 
ments of 1983)". 

(2) The amendments made by paragraph (1) shall take effect 
as though it were included in the Omnibus Budget Reconcili- 
ation Act of 1986. 

(h) Medically Needy Incurred Expenses. 

(1) Section 1902(a)(17) of the Social Security Act (42 U.S.C. 
1396a(a)(17)) is amended by striking "(whether in the form of; 
insurance premiums or otherwise)" and inserting "(whether in 
the form of insurance premiums or otherwise and regardless of 
whether such costs are reimbursed under another public pro- 
gram of the State or political subdivision thereof)". 

(2) The amendment made by paragraph (1) shall apply to costs 
incurred after the date of the enactment of this Act. 

(i) QUAUFICATIONS FOR CaSE MANAGERS FOR INDIVIDUALS WiTH 

Development Disabiuties and Chronic Mental Illness. — 

(1) Section 1915(g)(1) of such Act (42 U.S.C. 1396n(g)(l)) is 
amended by adding at the end the following new sentence: "The 
State may limit the case managers available with respect to 
case management services for eligible individuals with devel- 
opmental disabilities or with chronic mental illness in order to 
ensure that the case managers for such individuals are capable 
of ensuring that such individuals receive needed services.". 

(2) The amendment made by paragraph (1) shall take effect as 
though it were included in the enactment of the Consolidated 
Omnibus Budget Reconciliation Act of 1985. 

(j) Habiutation Services Effective Date. — Effective as if in-! 
eluded in the enactment of section 9502 of the Consolidated Omni-' 



^5 Subparagraph " "(c)" indented incorrectly. 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-157 



bus Budget Reconciliation Act of 1985, subsection (j)(l) of such 
section is amended by inserting before the period at the end the 
following: "to individuals eligible for services under a waiver 
granted under section 1915(c) of the Social Security Act, without 
regard to whether such individuals were receiving institutional 
I services before their participation in the waiver". 

(k) Section 2176 Waiver for Institutionalized Developmen- 
I TALLY Disabled. — Section 1915(c)(7) of the Social Security Act (42 
:j U.S.C. 1396n(cX7)) is amended by inserting "(A)" after "(7)" and 

adding at the end the following new subparagraph: 
I "(B) In making estimates under paragraph (2)(D) in the case of a 
waiver that applies only to individuals with developmental disabil- 
1 ities who are inpatients in a skilled nursing facility or intermediate 
care facility and whom the State has determined, on the basis of an 
evaluation under paragraph (2)(B), to need the level of services 
i provided by an intermediate care facility for the mentally retarded, 
jl the State may determine the average per capita expenditures that 
I would have been made in a fiscal year for those individuals under 
I the State plan on the basis of the average per capita expenditures 
f| under the State plan for services to individuals who are inpatients 
' in an intermediate care facility for the mentally retarded.". 
(1) Renewal of Freedom-of-Choice Waivers.— 

(1) Section 1915(h) of such Act (42 U.S.C. 1396n(h)) is amended 
by striking "denies such request in writing within 90 days after 
the date of its submission to the Secretary." and inserting ", 
within 90 days after the date of its submission to the Secretary, 
either denies such request in writing or informs the State 
agency in writing with respect to any additional information 
which is needed in order to make a final determination with 
respect to the request. After the date the Secretary receives 
such additional information, the request shall be deemed 
granted unless the Secretary, within 90 day of such date, denies 
such request.". 

(2) The amendment made by paragraph (1) shall apply to 
requests for continuation of waivers received after the date of 
the enactment of this Act. 

(m) Repeal of Coordinated Audit Requirement. — 

(1)(A) Section 1129 of such Act (42 U.S.C. 1320a-8) is repealed. 
(B) Section 1902(a)(42) of such Act (42 U.S.C. 1396a(a)(42)) is 
' 1 amended — 

|J (i) by striking "(A)", and 

(ii) by striking ", (B)" and all that follows up to the 
' ■ semicolon at the end. 

J J (2) The amendments made by paragraph (1) shall apply to 

' i audits conducted after the date of the enactment of this Act. 
j (n) Temporary Technical Error Definition. — For purposes of 
. 11 section 1903(u)(lXE)(ii) of the Social Security Act, effective for the 
^j] period beginning on the date of enactment of this Act and ending 
A December 31, 1988, a "technical error" is an error in eligibility 

condition (such as assignment of social security numbers and assign- 
j l ment of rights to third-party benefits as a condition of eligibility) 
• , that, if corrected, would not result in a difference in the amount of 

medical assistance paid. 



Effective date. 
42 use 1396n 
note. 



Effective date. 
42 use 1396a 
note. 

42 use 1396b 
note. 



Copy read " 'technical error' 



101 STAT. 1330-158 PUBLIC LAW 100-203— DEC. 22, 1987 

(o) Technical Amendments Relating to New Jersey Respite 
Care Pilot Project.— 

(1) Section 94140?) of the Omnibus Budget Reconciliation Act 
100 Stat. 2064. of 1986 is amended— 

(A) by redesignating paragraphs (2), (3), and (4), as para- 
graphs (3), (4), and (5), respectively, 

(B) by inserting after paragraph (1) the following new 
paragraph: 

"(2) provide that the State may submit a detailed proposal 
describing the project (in lieu of a formal request for the waiver 
of applicable provisions of title XIX of the Social Security Act) 
and that submission of such a description by the State will be 
treated as such a request for purposes of subsection (g),", and 

(C) in paragraph (3), as redesignated by paragraph (1) of 
this subsection, by striking "if the project" and all that 
follows through "Act" the second place it appears and 
inserting "the State shall utilize a post-eligibility cost-shar- 
ing formula based on the available income of participants 
with income in excess of the nonfarm income official pov- 
erty line (as defined by the Office of Management and 
Budget, and revised annually in accordance with section 
673(2) of the Omnibus Budget Reconciliation Act of 1981)". 

(2) (A) Section 9414(a) of the Omnibus Budget Reconciliation 
Act of 1986 is amended by striking "elderly and disabled 
individuals" and inserting "eligible individuals". 

(B) Section 9414(c) of the Omnibus Budget Reconciliation Act 
of 1986 is amended to read as follows: 
"(c) Definitions. — For purposes of this section— 

"(1) the term 'eligible individual* means an individual — 
"(A) who is elderly or disabled, 

"(B)(i) whose income (not including the income of the 
spouse or family of the individual) does not exceed 300 
percent of the amount in effect under section 1611(aXlXA) 
of the Social Security Act (as increased pursuant to section 
1617of such Act),or 

"(ii) in the case of an individual and spouse who are both 
dependent on a caregiver, whose combined incomes do not 
exceed such amount, 

"(C) whose liquid resources (as declared by the individual) 
do not exceed $40,000, 

"(D) who is at risk of institutionalization unless the 
individual's caregiver is provided with respite care, and 

"(E) who has been determined to meet the requirements 
of subparagraphs (A) through (D) in accordance with an 
application process designed by the State; and 
"(2) the term 'respite care services' shall include — 

"(A) short-term and intermittent — 

"(i) companion or sitter services (paid as well as 
volunteer), 

"(ii) homemaker and personal care-services, 
"(iii) adult day care, and 

"(iv) inpatient care in a hospital, a skilled nursing 
facility, or an intermediate care facility (not to exceed a 
total of 14 days for any individual), and 
"(B) peer support and training for family caregivers, 
(using informal support groups and organized counseling).". 



Copy read "by by". 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-159 



(3) Section 9414(g) of the Omnibus Budget Reconciliation Act 
of 1986 is amended by inserting "section 1902(a)(10)(C)(i)(III)," 
after "section 1902(a)(10)(B),". 

(4) The amendments made by this subsection shall be effective 
as if included in the enactment of the Omnibus Budget 
Reconciliation Act of 1986. 

(p) Miscellaneous Technical Corrections.— 

(1) Subclause (IX) of section 1902(a)(10)(A)(ii) of the Social 
Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended by moving 
it 4 ems to the right so as to align its left margin with that of 
subclause (VIII) of that section. 

(2) Subclause (X) of section 1902(a)(10)(A)(ii) of such Act (42 
U.S.C. 1396a(a)(10)(A)(ii)) is amended by moving it 2 ems to the 
right so as to align its left margin with that of subclause (VIII) 
of that section. 

(3) Section 1902(a)(17) of such Act (42 U.S.C. 1396a(a)(17)) is 
amended by striking "subsection (1)(3)" and inserting "subsec- 
tions (1X3), (m)(4), and (m)(5)". 

(4) Section 1902(a)(30XC) of such Act (42 U.S.C. 1396(aX30XC)) 
is amended by striking "provide" and inserting "use". 

(5) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is 
amended by inserting ", 1902(aX10XAXii)(X), or 1905(pXl)" after 
"1902(aX10)(AXii)(IX)^'. 

(6) Paragraph (9) of section 1902(e) of such Act (42 U.S.C. 
1396a(e)) is amended by moving the paragraph 2 ems to the left 
so as to align the left margin of subparagraph (A) (before clause 
(i)) and subparagraphs (B) and (C) with the left margin of 
paragraph (8). 

(7) Section 1902(1X1) of such Act (42 U.S.C. 1396a(lXl)) is 
amended — 

(A) by striking "(IXD Individuals" and inserting "(IXD 
Individuals", 

(B) by moving the matter before subparagraph (A) 2 ems 
to the left so it is indented only once, and 

(C) by striking ", whose" and inserting "and whose". 

(8) Sections 1902(1X2), 1902(mX2XA), 1905(pX2XA), and 501(bX2) 
of such Act (42 U.S.C. 1396a(lX2), 1396a(mX2XA), 1396d(pX2XA), 
7010t)X2)) are each amended by striking "nonfarm". 

(9) Paragraphs (1) and (2) of section 1925(a), as redesignated by 
section (4111(a)) of this title, are amended to read as follows: 

"(1) AFDC.— (A) Section 402(aX32) of this Act (relating to 
individuals who are deemed recipients of aid but for whom a 
payment is not made). 

'^(B) Section 402(aX37) of this Act (relating to individuals who 
lose AFDC eligibility due to increased earnings). 

"(C) Section 406(h) of this Act (relating to individuals who lose 
AFDC eligibility due to increased collection of child or spousal 
support). 

(D) Section 414(g) of this Act (relating to certain individuals 
participating in work supplementation programs). 

"(2) SSL— (A) Section 1611(e) of this Act (relating to treatment 
of couples sharing an accommodation in a facility). 

"(B) Section 1619 of this Act (relating to benefits for individ- 
uals who perform substantial gainful activity despite severe 
medical impairment). 

"(C) Section 1634(b) of this Act (relating to preservation ot 
benefit status for disabled widows and widowers who lost SSI 



100 Stat. 2064. 



Effective date. 



42 use 1396a. 



42 use 1396s. 



101 STAT. 1330-160 PUBLIC LAW 100-203~DEC. 22, 1987 

benefits because of 1983 changes in actuarial reduction 
formula). 

"(D) Section 1634(c) of this Act (relating to individuals who 
lose eligibility for SSI benefits due to entitlement to child's 
insurance benefits under section 202(d) of this Act).". 

(10) Effective as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1986, section 9411(a)(2)(B) of such 
Act is amended by inserting "such" after "need for". 

Subtitle C— Nursing Home Reform 
PART 1— MEDICARE PROGRAM 

SEC. 4201. REQUIREMENTS FOR SKILLED NURSING FACILITIES. 

(a) Specification of Facility Requirements.— Title XVIII of the 
Social Security Act is amended — 

(1) by amending subsection (j) of section 1861 (42 U.S.C. 1395x) 
to read as follows: 

"Skilled Nursing Facility 

"(j) The term 'skilled nursing facility' has the meaning given such 
term in section 1819(a)."; 

(2) by adding at the end of section 1864 (42 U.S.C. 1395aa) the 
following new subsection: 

Contracts. "(d) The Secretary may not enter an agreement under this section 

with a State with respect to determining whether an institution 
therein is a skilled nursing facility unless the State meets the 
requirements specified in section 1819(e)."; and 

(3) by adding at the end of part A the following new section: 

"requirements for, and assuring quauty of care in, skilled 
nursing facilities 

42 use 1395i-3. "SeC. 1819. (a) SKILLED NuRSING FACILITY DEFINED.— In this title, 

the term 'skilled nursing facility' means an institution (or a distinct 
part of an institution) which — 

"(1) is primarily engaged in providing to residents — 

"(A) skilled nursing care and related services for resi- 
dents who require medical or nursing care, or 

"(B) rehabilitation services for the rehabilitation of in- 
jured, disabled, or sick persons, 
and is not primarily for the care and treatment of mental 
diseases; 

"(2) has in effect a transfer agreement (meeting the require- 
ments of section 1861(1)) with one or more hospitals having 
agreements in effect under section 1866; and 

"(3) meets the requirements for a skilled nursing facility 
described in subsections (b), (c), and (d) of this section. 
"(b) Requirements Relating to Provision of Services.— 
* "(1) Quauty of ufe. — 

"(A) In general. — A skilled nursing facility must care 
for its residents in such a manner and in such an environ- 
ment as will promote maintenance or enhancement of the ' 
quality of life of each resident. 



Effective date. 
42 use 1396n. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-161 



"(B) Quality assessment and assurance. — A skilled 
nursing facility must maintain a quality assessment and 
assurance committee, consisting of the director of nursing 
services, a physician designated by the facility, and at least 
3 other members of the facility's staff, which (i) meets at 
least quarterly to identify issues with respect to which 
quality assessment and assurance activities are necessary 
and (ii) develops and implements appropriate plans of 
action to correct identified quality deficiencies. 
"(2) Scope of services and activities under plan of care.— 
A skilled nursing facility must provide services to attain or 
maintain the highest practicable physical, mental, and 
psychosocial well-being of each resident, in accordance with a 
written plan of care which — 

"(A) describes the medical, nursing, and psychosocial 
needs of the resident and how such needs will be met; 

"(B) is initially prepared, with the participation to the 
extent practicable of the resident or the resident's family or 
legal representative, by a team which includes the resi- 
dent's attending physician and a registered professional 
nurse with responsibility for the resident; and 

"(C) is periodically reviewed and revised by such team 
after each assessment under paragraph (3). 
"(3) Residents' assessment. — 

"(A) Requirement. — A skilled nursing facility must con- 
duct a comprehensive, accurate, standardized, reproducible 
assessment of each resident's functional capacity, which 
assessment — 

"(i) describes the resident's capability to perform 
daily life functions and significant impairments in 
functional capacity; 

"(ii) is based on a uniform minimum data set speci- 
fied by the Secretary under subsection (0(6)(A); 

"(iii) in the case of a resident eligible for benefits 
under title XIX, uses an instrument which is specified 
by the State under subsection (e)(5); and 

"(iv) in the case of a resident eligible for benefits 
under part A of this title, includes the identification of 
medical problems. 
"(B) Certification. — 

"(i) In general. — Each such assessment must be con- 
ducted or coordinated (with the appropriate participa- 
tion of health professionals) by a registered profes- 
sional nurse who signs and certifies the completion of 
the assessment. Each individual who completes a por- 
tion of such an assessment shall sign and certify as to 
the accuracy of that portion of the assessment, 
"(ii) Penalty for falsification. — 

"(I) An individual who willfully and knowingly 
certifies under clause (i) a material and false state- 
ment in a resident assessment is subject to a civil 
money penalty of not more than $1,000 with re- 
spect to each assessment. 

"(II) An individual who willfully and knowingly 
causes another individual to certify under clause (i) 
a material and false statement in a resident assess- 



19-139 0 - 88 - 6 (203) 



101 STAT. 1330-162 



PUBLIC LAW 100-203— DEC. 22, 1987 



ment is subject to a civil money penalty of not 
more than $5,000 with respect to each assessment. 

"(Ill) The Secretary shall provide for imposition 
of civil money penalties under this clause in a i 
manner similar to that for the imposition of civil 
money penalties under section 1128 A. 
"(iii) Use of independent assessors. — If a State 
determines, under a survey under subsection (g) or 
otherwise, that there has been a knowing and willful 
certification of false assessments under this paragraph, , 
the State may require (for a period specified by the 
State) that resident assessments under this paragraph 
be conducted and certified by individuals who are 
independent of the facility and who are approved by 
the State. 
"(C) Frequency. — 

"(i) In general. — Such an assessment must be 
conducted — 

"(I) promptly upon (but no later than 4 days j| 
after the date of) admission for each individual f 
admitted on or after October 1, 1990, and by not \ 
later than October 1, 1990, for each resident of the j 
facility on that date; ' 

"(II) promptly after a significant change in the ' 
resident's physical or mental condition; and 

"(III) in no case less often than once every 12 
months. \ 
"(ii) Resident review. — The skilled nursing facility 
must examine each resident no less frequently than 
once every 3 months and, as appropriate, revise the \ 
resident's assessment to assure the continuing accuracy j 
of the assessment. j 
"(D) Use. — The results of such an assessment shall be | 
used in developing, reviewing, and revising the resident's ^ 
plan of care under paragraph (2). 

"(E) Coordination.— Such assessments shall be coordi- 
nated with any State-required preadmission screening pro- 
gram to the maximum extent practicable in order to avoid 
duplicative testing and effort. 
"(4) Provision of services and activities.— 

"(A) In general.— To the extent needed to fulfill all 
plans of care described in paragraph (2), a skilled nursing 
facility must provide, directly or under arrangements (or, 
with respect to dental services, under agreements) with r 
others for the provision of — 

"(i) nursing services and specialized rehabilitative 
services to attain or maintain the highest practicable 
physical, mental, and psychosocial well-being of each 
resident; 

"(ii) medically-related social services to attain or 
maintain the highest practicable physical, mental, and 
psychosocial well-being of each resident; 

"(iii) pharmaceutical services (including procedures 
that assure the accurate acquiring, receiving, dispens- ■ 
ing, and administering of all drugs and biologicals) to 
meet the needs of each resident; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-163 

"(iv) dietary services that assure that the meals meet 
the daily nutritional and special dietary needs of each 
resident; 

"(v) an on-going program, directed by a qualified 
professional, of activities designed to meet the interests 
and the physical, mental, and psychosocial well-being 
of each resident; and 

"(vi) routine and emergency dental services to meet 
the needs of each resident. 
The services provided or arranged by the facility must meet 
professional standards of quality. Nothing in clause (vi) 
shall be construed as requiring a facility to provide or 
arrange for dental services described in that clause without 
additional charge. 

''(B) QuAUFiED PERSONS PROVIDING SERVICES.— Services 
described in clauses (i), (ii), (iii), (iv), and (vi) of subpara- 
graph (A) must be provided by qualified persons in accord- 
ance with each resident's written plan of care. 
"(C) Required NURSING CARE.— 

"(i) In general. — Except as provided in clause (ii), a 
skilled nursing facility must provide 24-hour nursing 
service which is sufficient to meet nursing needs of its 
residents and must employ the services of a registered 
professional nurse at least during the day tour of duty 
(of at least 8 hours a day) 7 days a week. 

"(ii) Exception.— To the extent that clause (i) may be 
deemed to require that a skilled nursing facility engage 
the services of a registered professional nurse for more 
than 40 hours a week, the Secretary is authorized to 
waive such requirement if the Secretary finds that— 
"(I) the facility is located in a rural area and the 
supply of skilled nursing facility services in such 
area is not sufficient to meet the needs of individ- 
uals residing therein, 

"(II) the facility has one full-time registered 
professional nurse who is regularly on duty at such 
facility 40 hours a week, and 

"(III) the facility either has only patients whose 
physicians have indicated (through physicians' 
orders or admission notes) that each such patient 
does not require the services of a registered nurse 
or a physician for a 48-hour period, or has made 
arrangements for a registered professional nurse 
or a physician to spend such time at such facility 
as may be indicated as necessary by the physician 
to provide necessary skilled nursing services on 
days when the regular full-time registered profes- 
sional nurse is not on duty. 
A waiver under this subparagraph shall be subject to 
annual renewal. 
"(5) Required training of nurse aides.— 

"(A) In general. — A skilled nursing facility must not use 
(on a full-time, temporary, per diem, or other basis) any 
individual, who is not a licensed health professional (as 
defined in subparagraph (E)), as a nurse aide in the facility 
on or after October 1, 1989, (or January 1, 1990, in the case 
of an individual used by the facility as a nurse aide before 



101 STAT. 1330-164 PUBLIC LAW 100-203— DEC. 22, 1987 



July 1, 1989) for more than 4 months unless the 
individual — 

"(i) has completed a training and competency evalua- 
tion program, or a competency evaluation program, 
approved by the State under subsection (e)(1)(A), and 
"(ii) is competent to provide such services. 

"(B) Offering competency evaluation programs for 
CURRENT employees. — A skilled nursing facility must pro- 
vide, for individuals used as a nurse aide by the facility as 
of July 1, 1989, for a competency evaluation program ap- 
proved by the State under subsection (e)(1) and such 
preparation as may be necessary for the individual to com- 
plete such a program by January 1, 1990. 

"(C) Competency.— The skilled nursing facility must not 
permit an individual, other than in a training and com- 
petency evaluation program approved by the State, to serve 
as a nurse aide or provide services of a type for which the 
individual has not demonstrated competency and must not 
use such an individual as a nurse aide unless the facility 
has inquired of the State registry established under subsec- 
tion (e)(2)(A) £is to information in the registry concerning 
the individual. 

"(D) Re-training required. — For purposes of subpara- 
graph (A), if, since an individual's most recent completion 
of a training and competency evaluation program, there 
has been a continuous period of 24 consecutive months 
during none of which the individual performed nursing or 
nursing-related services for monetary compensation, such 
individual shall complete a new training and competency 
evaluation program. 

"(E) Regular in-service education. — The skilled nurs- 
ing facility must provide such regular performance review 
and regular in-service education as assures that individuals 
used as nurse aides are competent to perform services as 
nurse aides, including training for individuals providing 
nursing and nursing-related services to residents with cog- 
nitive impairments. 

"(F) Nurse aide defined. — In this paragraph, the term 
'nurse aide' means any individual providing nursing or 
nursing-related services to residents in a skilled nursing 
facility, but does not include an individual — 

"(i) who is a licensed health professional (as defined 
in subparagraph (G)), or 

"(ii) who volunteers to provide such services without 
monetary compensation. 

"(G) Licensed health professional defined. — In this 
paragraph, the term 'licensed health professional' means a 
physician, physician assistant, nurse practitioner, physical, 
speech, or occupational therapist, registered professional 
nurse, licensed practical nurse, or licensed or certified 
social worker. 

"(6) Physician supervision and clinical records.— A skilled 
nursing facility must — 

"(A) require that the medical care of every resident be 
provided under the supervision of a physician; 

"(B) provide for having a physician available to furnish 
necessary medical care in case of emergency; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-165 



**(C) maintain clinical records on all residents, which 
records include the plans of care (described in paragraph 
(2)) and the residents' assessments (described in para- 
graph (3)). 

"(7) Required social services. — In the case of a skilled nurs- 
ing facility with more than 120 beds, the facility must have at 
least one social worker (with at least a bachelor's degree in 
social work or similar professional qualifications) employed full- 
time to provide or assure the provision of social services. 
"(c) Requirements Relating to Residents' Rights.— 
"(1) General rights.— 

"(A) Specified rights. — A skilled nursing facility must 
protect and promote the rights of each resident, including 
each of the following rights: 

"(i) Free choice. — The right to choose a personal 
attending physician, to be fully informed in advance 
about care and treatment, to be fully informed in 
advance of any changes in care or treatment that may 
affect the resident's well-being, and (except with re- 
spect to a resident adjudged incompetent) to participate 
in planning care and treatment or changes in care and 
treatment. 

"(ii) Free from restraints.— The right to be free 
from physical or mental abuse, corporal punishment, 
involuntary seclusion, and any physical or chemical 
restraints imposed for purposes of discipline or conven- 
ience and not required to treat the resident's medical 
symptoms. Restraints may only be imposed — 

"(I) to ensure the physical safety of the resident 
or other residents, and 

"(II) only upon the written order of a physician 
that specifies the duration and circumstances 
under which the restraints are to be used (except 
in emergency circumstances specified by the Sec- 
retary) until such an order could reasonably be 
obtained. 

"(iii) Privacy.— The right to privacy with regard to 
accommodations, medical treatment, written and tele- 
phonic communications, visits, and meetings of family 
and of resident groups. 

"(iv) Confidentiauty. — The right to confidentiality 
of personal and clinical records. 

"(v) Accommodation of needs.— The right- 
ed) to reside and receive services with reason- 
able accommodations of individual needs and pref- 
erences, except where the health or safety of the 
individual or other residents would be endangered, 
and 

"(II) to receive notice before the room or room- 
mate of the resident in the facility is changed, 
"(vi) Grievances. — The right to voice grievances 
with respect to treatment or care that is (or fails to be) 
furnished, without discrimination or reprisal for voic- 
ing the grievances and the right to prompt efforts by 
the facility to resolve grievances the resident may 
have, including those with respect to the behavior of 
other residents. 



101 STAT. 1330-166 PUBLIC LAW 100-203— DEC. 22, 1987 



"(vii) Participation in resident and family 
GROUPS. — The right of the resident to organize and 
participate in resident groups in the facility and the 
right of the resident's family to meet in the facility 
with the families of other residents in the facility. 

^"^ "(viii) Participation in other activities. — The 
right of the resident to participate in social, religious, 
and community activities that do not interfere with the 
rights of other residents in the facility. 

^® "(ix) Examination of survey results.— The right 
to examine, upon reasonable request, the results of the 
most recent survey of the facility conducted by the 
Secretary or a State with respect to the facility and any 
plan of correction in effect with respect to the facility. 

"(x) Other rights.— Any other right established 
by the Secretary. 
Clause (iii) shall not be construed as requiring the provision 
of a private room. 

*'(B) Notice of rights and services.— A skilled nursing 
facility must — 

"(i) inform each resident, orally and in writing at the 
time of admission to the facility, of the resident's legal 
rights during the stay at the facility; 

**(ii) make available to each resident, upon reason- 
able request, a written statement of such rights (which 
statement is updated upon changes in such rights); and 
' "(iii) inform each other resident, in writing before or 
at the time of admission and periodically during the 
resident's stay, of services available in the facility and 
of related charges for such services, including any 
charges for services not covered under this title or by 
the facility's basic per diem charge. 
The written description of legal rights under this subpara- 
graph shall include a description of the protection of per- 
sonal funds under paragraph (6) and a statement that a 
resident may file a complaint with a State survey and 
certification agency respecting resident abuse and neglect 
and misappropriation of resident property in the facility. 

"(C) Rights of incompetent residents.— In the case of a 
resident adjudged incompetent under the laws of a State, 
the rights of the resident under this title shall devolve 
upon, and, to the extent judged necessary by a court of 
competent jurisdiction, be exercised by, the person ap- 
pointed under State law to act on the resident's behalf. 
"(2) Transfer and discharge rights.— 

"(A) In general. — A skilled nursing facility must permit 
each resident to remain in the facility and must not trans- 
fer or discharge the resident from the facility unless — 
"(i) the transfer or discharge is necessary to meet the 
resident's welfare and the resident's welfare cannot be 
met in the facility; 

"(ii) the transfer or discharge is appropriate because 
the resident's health has improved sufficiently so the 



^'Copy read " "(ix)". 
**Copy read " "(x)". 
^^Copy read " "(xi)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330 

resident no longer needs the services provided by the 
facility; 

*'(iii) the safety of individuals in the facility is 
endangered; 

"(iv) the health of individuals in the facility would 
otherwise be endangered; 

"(v) the resident has failed, after reasonable and 
appropriate notice, to pay (or to have paid under this 
title or title XIX on the resident's behalf) an allowable 
charge imposed by the facility for an item or service 
requested by the resident and for which a charge may 
be imposed consistent with this title and title XIX; or 
"(vi) the facility ceases to operate. 
In each of the cases described in clauses (i) through (v), the 
basis for the transfer or discharge must be documented in 
the resident's clinical record. In the cases described in 
clauses (i) and (ii), the documentation must be made by the 
resident's physician, and in the cases described in clauses 
(iii) and (iv) the documentation must be made by a 
physician. 

"(B) Pre-transfer and pre-discharge notice.— 

"(i) In general.— Before effecting a transfer or dis- 
charge of a resident, a skilled nursing facility must — 
"(I) notify the resident (and, if known, a family 
member of the resident or legal representative) of 
the transfer or discharge and the reasons therefor, 
"(II) record the reasons in the resident's clinical 
record (including any documentation required 
under subparagraph (A)), and 

"(III) include in the notice the items described in 
clause (iii). 

"(ii) Timing of notice.— The notice under clause (i)(I) 
must be made at least 30 days in advance of the 
resident's transfer or discharge except — 

"(I) in a case described in clause (iii) or (iv) of 
subparagraph (A); 

"(II) in a case described in clause (ii) of subpara- 
graph (A), where the resident's health improves 
sufficiently to allow a more immediate transfer or 
discharge; 

"(III) in a case described in clause (i) of subpara- 
graph (A), where a more immediate transfer or 
discharge is necessitated by the resident's urgent 
medical needs; or 

"(IV) in a case where a resident has not resided 
in the facility for 30 days. 
In the case of such exceptions, notice must be given as 
many days before the date of the transfer or discharge 
as is practicable. 

"(iii) Items included in notice.— Each notice under 
clause (i) must include— 

"(I) for transfers or discharges effected on or 
after October 1, 1990, notice of the resident's right 
to appeal the transfer or discharge under the State 
process established under subsection (eX3); and 

"(II) the name, mailing address, and telephone 
number of the State long-term care ombudsman 



101 STAT. 1330-168 PUBLIC LAW 100-203— DEC. 22, 1987 



(established under section 307(a)(12) of the Older 

Americans Act of 1965). 
"(C) Orientation.— A skilled nursing facility must pro- 
vide sufficient preparation and orientation to residents to 
ensure safe and orderly transfer or discharge from the 
facility. 

"(3) Access and visitation rights.— A skilled nursing facility 
must — 

"(A) permit immediate access to any resident by any 
representative of the Secretary, by any representative of 
the State, by an ombudsman described in paragraph 
(2)(B)(iii)(II), or by the resident's individual physician; 

"(B) permit immediate access to a resident, subject to the 
resident's right to deny or withdraw consent at any time, by 
immediate family or other relatives of the resident; 

"(C) permit immediate access to a resident, subject to 
reasonable restrictions and the resident's right to deny or 
withdraw consent at any time, by others who are visiting 
with the consent of the resident; 

"(D) permit reasonable access to a resident by any entity 
or individual that provides health, social, legal, or other 
services to the resident, subject to the resident's right to 
deny or withdraw consent at any time; and 

"(E) permit representatives of the State ombudsman (de- 
scribed in paragraph (2)(B)(iii)(II)), with the permission of 
the resident (or the resident's legal representative) and 
consistent with State law, to examine a resident's clinical 
records. 

"(4) Equal access to quality care. — A skilled nursing facil- 
ity must establish and maintain identical policies and practices 
regarding transfer, discharge, and covered services under this 
title for all individuals regardless of source of payment. 
"(5) Admissions Poucy.— 

"(A) Admissions. — With respect to admissions practices, a 
skilled nursing facility must — 

"(i)(I) not require individuals applying to reside or 
residing in the facility to waive their rights to benefits 
under this title or under a State plan under title XIX, 
(II) not require oral or written assurance that such 
individuals are not eligible for, or will not apply for, 
benefits under this title or such a State plan, and (III) 
prominently display in the facility and provide to such 
individuals written information about how to apply for 
and use such benefits and how to receive refunds for 
previous payments covered by such benefits; and 

"(ii) not require a third party guarantee of payment 
to the facility as a condition of admission (or expedited 
admission) to, or continued stay in, the facility. 
"(B) Construction.— 

"(i) No preemption of stricter standards. — 
Subparagraph (A) shall not be construed as preventing 
States or political subdivisions therein from prohibit- 
ing, under State or local law, the discrimination 
against individuals who are entitled to medical assist- 
ance under this title with respect to admissions prac- 
tices of skilled nursing facilities. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-169 

"(ii) Contracts with legal representatives. — 
Subparagraph (AXii) shall not be construed as prevent- 
ing a facility from requiring an individual, who has 
legal access to a resident's income or resources avail- 
able to pay for care in the facility, to sign a contract 
(without incurring personal financial liability) to pro- 
vide payment from the resident's income or resources 
for such care. 
"(6) Protection op resident funds.— 

"(A) In general. — The skilled nursing facility— 

"(i) may not require residents to deposit their per- 
sonal funds with the facility, and 

**(ii) once the facility accepts the written authoriza- 
tion of the resident, must hold, safeguard, and account 
for such personal funds under a system established and 
maintained by the facility in accordance with this para- 
graph. 

"(B) Management of personal funds.— Upon a facility's 
acceptance of written authorization of a resident under 
subparagraph (AXii), the facility must manage and account 
for the personal funds of the resident deposited with the 
facility as follows: 

"(i) Deposit.— The facility must deposit any amount 
of personal funds in excess of $50 with respect to a 
resident in an interest bearing account (or accounts) 
that is separate from any of the facility's operating 
accounts and credits all interest earned on such sepa- 
rate account to such account. With respect to any other 
personal funds, the facility must maintain such funds 
in a non-interest bearing account or petty cash fund. 

"(ii) Accounting and records.— The facility must 
assure a full and complete separate accounting of each 
such resident's personal funds, maintain a written 
record of all financial transactions involving the per- 
sonal funds of a resident deposited with the facility, 
and afford the resident (or a legal representative of the 
resident) reasonable access to such record. 

"(iii) Conveyance upon death.— Upon the death 
of a resident with such an account, the facility must 
convey promptly the resident's personal funds (and a 
final accounting of such funds) to the individual admin- 
istering the resident's estate. 
"(C) Assurance of financial security.— The facility 
must purchase a surety bond, or otherwise provide assur- 
ance satisfactory to the Secretary, to assure the security of 
all personal funds of residents deposited with the facility. 

"(D) Limitation on charges to personal funds.— The 
facility may not impose a charge against the personal funds 
of a resident for any item or service for which payment is 
made under this title or title XIX. 
"(d) Requirements Relating to Administration and Other 
Matters. — 

"(1) Administration.— 

"(A) In general.— a skilled nursing facility must be 
administered in a manner that enables it to use its re- 
sources effectively and efficiently to attain or maintain the 
highest practicable physical mental, and psychosocial well- 



101 STAT. 1330-170 PUBLIC LAW 100-203— DEC. 22, 1987 

being of each resident (consistent with requirements estab- 
lished under subsection (f)(5)). 
''(B) Required notices.— If a change occurs in— 

"(i) the persons with an ownership or control interest 
(as defined in section 1124(a)(3)) in the facility, t 
"(ii) the persons who are officers, directors, agents, or 
managing employees (as defined in section 1126(b)) ofj 
the facility, 

"(iii) the corporation, association, or other company 
responsible for the management of the facility, or 

"(iv) the individual who is the administrator or direc-l 
tor of nursing of the facility, 
_ the skilled nursing facility must provide notice to the State 

agency responsible for the licensing of the facility, at the 
time of the change, of the change and of the identity of each 
new person, company, or individual described in the respec- 
tive clause. 

"(C) Skilled nursing facility administrator.— The 
administrator of a skilled nursing facility must meet stand- 
ards established by the Secretary under subsection (f)(4). ' 
''(2) Licensing AND life safety code.— 

''(A) Licensing.— A skilled nursing facility must be li- 
, censed under applicable State and local law. ! 

"(B) Life safety code.— A skilled nursing facility must 
meet such provisions of such edition (as specified by the 
Secretary in regulation) of the Life Safety Code of the 
National Fire Protection Association as are applicable to 
nursing homes; except that — 

"(i) the Secretary may waive, for such periods as he 
deems appropriate, specific provisions of such Code 
which if rigidly applied would result in unreasonable 
hardship upon a facility, but only if such waiver would 
not adversely affect the health and safety of residents 
or personnel, and 

"(ii) the provisions of such Code shall not apply in 
any State if the Secretary finds that in such State there 
is in effect a fire and safety code, imposed by State law, 
? - ^ which adequately protects residents of and personnel in 

skilled nursing facilities. 
"(3) Sanitary and infection control and physical environ- 
ment. — A skilled nursing facility must — 

"(A) establish and maintain an infection control program 
designed to provide a safe, sanitary, and comfortable 
environment in which residents reside and to help prevent 
the development and transmission of disease and infection, 
and 

"(B) be designed, constructed, equipped, and maintained 
in a manner to protect the health and safety of residents, 
personnel, and the general public. 
"(4) Miscellaneous.— 

"(A) COMPUANCE with FEDERAL, STATE, AND LOCAL LAWS 

AND PROFESSIONAL STANDARDS. — A skilled nursing facility 
* must operate and provide services in compliance with all 

applicable Federal, State, and local laws and regulations 
(including the requirements of section 1124) and with 
accepted professional standards and principles which apply ' 
to professionals providing services in such a facility. 



•■^^'Copy read "sections". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-171 



"(B) Other. — A skilled nursing facility must meet such 
other requirements relating to the health, safety, and well- 
being of residents or relating to the physical facilities 
thereof as the Secretary may find necessary. 
"(e) State Requirements Relating to Skilled Nursing Facility 
Requirements. — The requirements, referred to in section 1864(d), 
with respect to a State are as follows: 

"(1) Specification and review of nurse aide training and 
competency evaluation programs and of nurse aide com- 
petency evaluation programs. — The State must — 

"(A) by not later than March 1, 1989, specify those train- 
ing and competency evaluation programs, and those com- 
petency evaluation programs, that the State approves for 
purposes of subsection (b)(5) and that meet the require- 
ments established under clause (i) or (ii) of subsection 
(f)(2)(A), and 

"(B) by not later than March 1, 1990, provide for the 
review and reapproval of such programs, at a frequency and 
using a methodology consistent with the requirements 
established under subsection (f)(2)(A)(iii). 
The failure of the Secretary to establish requirements under 
subsection (0(2) shall not relieve any State of its responsibility 
under this paragraph. 
"(2) Nurse aide REGISTRY. — 

"(A) In GENERAL.— By not later than March 1, 1989, the 
State shall establish and maintain a registry of all individ- 
uals who have satisfactorily completed a nurse aide train- 
ing and competency evaluation program, or a nurse aide 
competency evaluation program, approved under para- 
graph (1) in the State. 

"(B) Information in registry. — The registry under 
subparagraph (A) shall provide (in accordance with regula- 
tions of the Secretary) for the inclusion of specific docu- 
mented findings by a State under subsection (gXl)(C) of 
resident neglect or abuse or misappropriation of resident 
property involving an individual listed in the registry, as 
well as any brief statement of the individual disputing the 
findings. In the case of inquiries to the registry concerning 
an individual listed in the registry, any information dis- 
closed concerning such a finding shall also include disclo- 
sure of any such statement in the registry relating to the 
finding or a clear and accurate summary of such a 
statement. 

"(3) State appeals process for transfers.— The State, for 
transfers from skilled nursing facilities effected on or after 
October 1, 1990, must provide for a fair mechanism for hearing 
appeals on transfers of residents of such facilities. Such mecha- 
nism must meet the guidelines established by the Secretary 
under subsection (fK3); but the failure of the Secretary to estab- 
lish such guidelines shall not relieve any State of its responsibil- 
ity to provide for such a fair mechanism. 

"(4) Skilled nursing facility administrator standards. — 
By not later than January 1, 1990, the State must have imple- 
mented and enforced the skilled nursing facility administrator 
standards developed under subsection (fK4) respecting the quali- 
fication of administrators of skilled nursing facilities. 



101 STAT. 1330-172 PUBLIC LAW 100-203— DEC. 22, 1987 



"(5) Specification of resident assessment instrument. — 
Effective July 1, 1989, the State shall specify the instrument to 
be used by nursing facilities in the State in complying with the 
requirement of subsection (b)(3)(A)(iii). Such instrument shall 
be- 

"(A) one of the instruments designated under subsection 
(f)(6)(B), or 

"(B) an instrument which the Secretary has approved as 
being consistent with the minimum data set of core ele- 
ments, common definitions, and utilization guidelines speci- 
fied by the Secretary under subsection (f)(6)(A). 
"(D Responsibilities of Secretary Relating to Skilled Nursing 
Faciuty Requirements. — 

"(1) General responsibility. — It is the duty and responsibil- 
ity of the Secretary to assure that requirements which govern 
the provision of care in skilled nursing facilities under this title, 
and the enforcement of such requirements, are adequate to 
protect the health, safety, welfare, and rights of residents and to 
promote the effective and efficient use of public moneys. 

"(2) Requirements for nurse aide training and com- 
petency evaluation programs and for nurse aide com- 
petency evaluation programs. — 

"(A) In general. — For purposes of subsections (b)(5) and 
(e)(1)(A), the Secretary shall establish, by not later than 
September 1, 1988— 

"(i) requirements for the approval of nurse aide 
training and competency evaluation programs, includ- 
ing requirements relating to (I) the areas to be covered 
in such a program (including at least basic nursing 
skills, personal care skills, cognitive, behavioral and 
social care, basic restorative services, and residents' 
rights), content of the curriculum, (II) minimum hours 
of initial and ongoing training and retraining (includ- 
ing not less than 75 hours in the case of initial train- 
ing), (III) qualifications of instructors, and (IV) proce- 
dures for determination of competency; 

"(ii) requirements for the approval of nurse aide 
competency evaluation programs, including require- 
ment relating to the areas to be covered in such a 
program, including at least basic nursing skills, per- 
; * sonal care skills, cognitive, behavioral and social care, 

' basic restorative services, residents' rights, and proce- 

dures for determination of competency; and 

"(iii) requirements respecting the minimum fre- 
quency and methodology to be used by a State in 
reviewing such programs' compliance with the require- 
ments for such programs. 
"(B) Approval of certain programs. — Such require- 
ments — 

"(i) may permit approval of programs offered by or in 
facilities, as well as outside facilities (including em- 
ployee organizations), and of programs in effect on the 
date of the enactment of this section; 

"(ii) shall permit a State to find that an individual 
who has completed (before July 1, 1989) a nurse aide 
training and competency evaluation program shall be 
deemed to have completed such a program approved 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330- 



under subsection (bX5) if the State determines that, at 
the time the program was offered, the program met the 
requirements for approval under such paragraph; and 
"(iii) shall prohibit approval of such a program — 
"(I) offered by or in a skilled nursing facility 
which has been determined to be out of compliance 
with the requirements of subsection (b), (c), or (d), 
within the previous 2 years, or 

"(II) offered by or in a skilled nursing facility 
unless the State makes the determination, upon an 
individual's completion of the program, that the 
individual is competent to provide nursing and 
nursing-related services in skilled nursing 
facilities. 

A State may not delegate its responsibility under 
clause (iiiXII) to the skilled nursing facility. 
"(3) Federal guideunes for state appeals process for 
TRANSFERS.— For purposes of subsections (c)(2XBXiii)(I) and (eX3), 
I by not later than October 1, 1989, the Secretary shall establish 
guidelines for minimum standards which State appeals proc- 
f esses under subsection (eX3) must meet to provide a fair mecha- 
' nism for hearing appeals on transfers of residents from skilled 
! nursing facilities. 

I "(4) Secretarial standards for quaufication of adminis- 
j trators. — For purposes of subsections (dXlXC) and (eX4), the 
1 Secretary shall develop, by not later than March 1, 1989, stand- 
'! ards to be applied in assuring the qualifications of administra- 
tors of skilled nursing facilities. 

"(5) Criteria for administration.— The Secretary shall 
Ij establish criteria for £issessing a skilled nursing facility's 
compliance with the requirement of subsection (dXD with 
respect to — 

"(A) its governing body and management, 
"(B) agreements with hospitals regarding transfers of 
residents to and from the hospitals and to and from other 
skilled nursing facilities, 
"(C) disaster preparedness, 
"(D) direction of medical care by a physician, 
"(E) laboratory and radiological services, 
"(F) clinical records, and 
jl "(G) resident and advocate participation. 

||i "(6) Specification of resident assessment data set and 
instruments.— The Secretary shall— 

"(A) not later than July 1, 1989, specify a minimum data 
set of core elements and common definitions for use by 
nursing facilities in conducting the assessments required 
under subsection (bX3), and establish guidelines for utiliza- 
tion of the data set; and 

"(B) by not later than October 1, 1990, designate one or 
more instruments which are consistent with the specifica- 
tion made under subparagraph (A) and which a State may 
I specify under subsection (eX5XA) for use by nursing facili- 
I ties in complying with the requirements of subsection 
(bX3XAXiii). 

'i "(7) List of items and services furnished in skilled nurs- 
ing facilities not chargeable to the personal funds of a 
, resident. — 



101 STAT. 1330-174 PUBLIC LAW 100-203— DEC. 22, 1987 

"(A) Regulations required. — Pursuant to the require- 
ment of section 21(b) of the Medicare-Medicaid Anti-Fraud 
and Abuse Amendments of 1977, the Secretary shall issue 
regulations, on or before the first day of the seventh month 
to begin after the date of enactment of this section, that 
define those costs which may be charged to the personal 
funds of patients in skilled nursing facilities who are 
individuals receiving benefits under this part and those 
costs which are to be included in the reasonable cost (or 
other payment amount) under this title for extended care 
services. 

"(B) Rule if failure to pubush regulations.— If the 
Secretary does not issue the regulations under subpara- 
graph (A) on or before the date required in such subpara- 
graph, in the case of a resident of a skilled nursing facility 
who is eligible to receive benefits under this part, the costs 
which may not be charged to the personal funds of such 
resident (and for which payment is considered to be made 
under this title) shall not include, at a minimum, the costs 
for routine personal hygiene items and services furnished 
by the facility.", 
(b) Costs of Meeting Requirements.— 
42 use I395x. (1) Under REASONABLE COST.— Section 1861(v)(l)(E) of such Act 

(42 U.S.C. 1395s(vXl)(E)) is amended by adding at the end the 
following new sentence: "Notwithstanding the previous sen- 
tence, such regulations with respect to skilled nursing facilities 
shall take into account (in a manner consistent with subpara- 
graph (A) and based on patient-days of services furnished) the 
costs of such facilities complying with the requirements of 
subsections (b), (c), and (d) of section 1819 (including the costs of 
conducting nurse aide training and competency evaluation pro- 
grams and competency evaluation programs).". 

(2) Adjustment in prospective payments. — Section 1888(d) of 
such Act (42 U.S.C. 1395yy(d)) is amended by adding at the end 
the following new paragraph: 
"(7) In computing the rates of payment to be made under this 
subsection, there shall be taken into account the costs described in 
the last sentence of section 1861(v)(l)(E) (relating to compliance with 
nursing facility requirements and of conducting nurse aide training 
and competency evaluation programs and competency evaluation 
programs).". 

Reports. (c) EVALUATION. — The Secretary of Health and Human Services 

42 use i395i-3 shall evaluate, and report to Congress by not later than January 1, 
^ 1992, on the implementation of the resident assessment process for 

residents of skilled nursing facilities under the amendments made 

by this section. 

(d) Conforming Amendment. — Section 1861(a)(2) of the Social 
Security Act (42 U.S.C. 1395x(aX2)) is amended by striking "skilled 
nursing facility" and inserting "facility described in section 
1919(a)(2) or subsection (yXD". 

SEC. 4202. SURVEY AND CERTIFICATION PROCESS. 

(a) State Requirement for Process. — Title XVIII of the Social 
Security Act is amended — 

(1) in section 1864(d) (42 U.S.C. 1395aa(d)), as added by section 
4201(aX2) of this Act, by inserting before the period "and section 
1819(g)", and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-175 



(2) in section 1819, as added by section 4201(a)(3) of this Act, 
by adding at the end the following new subsection: 
"ig) Survey and Certification Process. — 
"(1) State and federal responsibiuty. — 

"(A) In general. — Pursuant to an agreement under sec- 
tion 1864, each State shall be responsible for certifying, in 
accordance with surveys conducied under paragraph (2), 
the compliance of skilled nursing facilities (other than 
facilities of the State) with the requirements of subsections 
(b), (c), and (dl The Secretary shall be responsible for 
certifying, in accordance with surveys conducted under 
paragraph (2), the compliance of State skilled nursing facili- 
ties with the requirements of such subsections. 

"(B) Educational program.— Each State shall conduct 
periodic educational programs for the staff and residents 
(and their representatives) of skilled nursing facilities in 
order to present current regulations, procedures, and poli- 
cies under this section. 
"(C) Investigation of allegations of resident neglect 

AND ABUSE AND MISAPPROPRIATION OF RESIDENT PROPERTY. — 

The State shall provide, through the agency responsible for 
surveys and certification of nursing facilities under this 
subsection, for a process for the receipt, review, and inves- 
tigation of allegations of neglect and abuse and misappro- 
priation of resident property by a nurse aide of a resident in 
a nursing facility. If the State fmds, after notice to the 
nurse aide involved and a reasonable opportunity for a 
hearing for the nurse aide to rebut allegations, that a nurse 
aide whose name is contained in a nurse aide registry has 
neglected or abused a resident or misappropriated resident 
property in a facility, the State shall notify the nurse aide 
and the registry of such fmding. 

"(D) Construction.— The failure of the Secretary to 
establish standards under subsection (f) shall not relieve a 
Stat€ of its responsibility under this subsection. 
"(2) Surveys.— 

"(A) Standard survey.— 

"(i) In general.— Each skilled nursing facility shall 
be subject to a standard survey, to be conducted with- 
out any prior notice to the facility. Any individual who 
notifies (or causes to be notified) a skilled nursing 
facility of the time or date on which such a survey is 
scheduled to be conducted is subject to a civil money 
penalty of not to exceed $2,000. The Secretary shall 
provide for imposition of civil money penalties under 
this clause in a manner similar to that for the imposi- 
tion of civil money penalties under section 1128 A. The 
Secretary shall review each State's procedures for the 
scheduling and conduct of standard surveys to assure 
that the State has taken all reasonable steps to avoid 
giving notice of such a survey through the scheduling 
procedures and the conduct of the surveys themselves. 

"(ii) Contents. — Each standard survey shall include, 
for a case-mix stratified sample of residents — 

"(I) a survey of the quality of care furnished, as 
measured by indicators of medical, nursing, and 
rehabilitative care, dietary and nutrition services, 



101 STAT. 1330-176 PUBLIC LAW 100-203— DEC. 22, 1987 



activities and social participation, and sanitation, 
infection control, and the physical environment, » 

"(II) written plans of care provided under subsec- 
tion (b)(2) and an audit of the residents' assess- 
ments under subsection (b)(3) to determine the ac- | 
curacy of such assessments and the adequacy of 
such plans of care, and 

"(III) a review of compliance with residents' 
rights under subsection (c). 
"(iii) Frequency.— 

"(I) In general.— Each skilled nursing facility ! 
shall be subject to a standard survey not later than 
15 months after the date of the previous standard 
survey conducted under this subparagraph. The 
Statewide average interval between standard sur- 
veys of skilled nursing facilities under this subsec- 
tion shall not exceed 12 months. 

"(II) Special surveys. — If not otherwise con- 
ducted under subclause (I), a standard survey (or 
an abbreviated standard survey) may be conducted 
within 2 months of any change of ownership, 
administration, management of a skilled nursing 
facility, or the director of nursing in order to deter- 
mine whether the change has resulted in any de- 
cline in the quality of care furnished in the facility, i 
"(B) Extended surveys. — 

"(i) In general. — Each skilled nursing facility which 
is found, under a standard survey, to have provided 
substandard quality of care shall be subject to an ex- 
tended survey. Any other facility may, at the Sec- 
retary's or State's discretion, be subject to such an 
extended survey (or a partial extended survey). 

"(ii) Timing.— The extended survey shall be con- {; 
ducted immediately after the standard survey (or, if not 
practical, not later than 2 weeks after the date of ] 
completion of the standard survey). ' 

"(iii) Contents. — In such an extended survey, the i 
survey team shall review and identify the policies and ; 
procedures which produced such substandard quality of I 
care and shall determine whether the facility has com- i 
plied with all the requirements described in subsections | 
Contracts. (b), (c), and (d). Such review shall include an expansion I 

of the size of the sample of residents' assessments i 
reviewed and a review of the staffing, of in-service I 
training, and, if appropriate, of contracts with consult- j i 
ants. I 
"(iv) Construction. — Nothing in this paragraph i 
shall be construed as requiring an extended or partial i 
extended survey as a prerequisite to imposing a sanc- 
tion against a facility under subsection (h) on the basis i 
of findings in a standard survey. 
^ "(C) Survey protocol. — Standard and extended surveys i 

shall be conducted — i 
"(i) based upon a protocol which the Secretary has 
developed, tested, and validated by not later than Octo- i 
ber 1, 1990, and ' 1 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330- 

"(ii) by individuals, of a survey team, who meet such 
minimum qualifications as the Secretary establishes by 
not later than such date. 
The failure of the Secretary to develop, test, or validate 
such protocols or to establish such minimum qualifications 
shall not relieve any State of its responsibility (or the 
Secretary of the Secretary's responsibility) to conduct sur- 
veys under this subsection. 

(D) Consistency of surveys.— Each State and the Sec- 
retary shall implement programs to measure and reduce 
inconsistency in the application of survey results among 
surveyors. 
"(E) Survey teams.— 

"(i) In general. — Surveys under this subsection shall 
be conducted by a multidisciplinary team of profes- 
sionals (including a registered professional nurse). 

"(ii) Prohibition of conflicts of interest. — A State 
may not use as a member of a survey team under this 
subsection an individual who is serving (or has served 
within the previous 2 years) as a member of the staff of, 
or as a consultant to, the facility surveyed respecting 
compliance with the requirements of subsections (b), (c), 
and (d), or who has a personal or familial financial 
interest in the facility being surveyed. 

"(iii) Training. — The Secretary shall provide for the 
comprehensive training of State and Federal surveyors 
in the conduct of standard and extended surveys under 
this subsection, including the auditing of resident 
assessments and plans of care. No individual shall 
serve as a member of a survey team unless the individ- 
ual has successfully completed a training and testing 
program in survey and certification techniques that 
has been approved by the Secretary. 
"(3) Vaudation surveys.— 

**(A) In general.— The Secretary shall conduct onsite 
surveys of a representative sample of skilled nursing facili- 
ties in each State, within 2 months of the date of surveys 
conducted under paragraph (2) by the State, in a sufficient 
number to allow inferences about the adequacies of each 
State's surveys conducted under paragraph (2). In conduct- 
ing such surveys, the Secretary shall use the same survey 
protocols as the State is required to use under paragraph 
(2). If the State has determined that an individual skilled 
nursing facility meets the requirements of subsections (h)y 
(c), and (d), but the Secretary determines that the facility 
does not meet such requirements, the Secretary's deter- 
mination as to the facility's noncompliance with such 
requirements is binding and supersedes that of the State 
survey. 

"(B) Scope. — With respect to each State, the Secretary 
shall conduct surveys under subparagraph (A) each year 
with respect to at least 5 percent of the number of skilled 
nursing facilities surveyed by the State in the year, but in 
no case less than 5 skilled nursing facilities in the State. 
"(C) Remedies for substandard performance.— If the 
' Secretary finds, on the basis of such surveys, that a State 
has failed to perform surveys as required under paragraph 



101 STAT. 1330-178 PUBLIC LAW 100-203— DEC. 22, 1987 

(2) or that a State's survey and certification performance 
otherwise is not adequate, the Secretary shall provide for 
an appropriate remedy, which may include the training of 
survey teams in the State. 

60 "(D) Special surveys of compliance. — Where the Sec- 
retary has reason to question the compliance of a skilled 
nursing facility with any of the requirements of subsections 
(b), (c), and (d), the Secretary may conduct a survey of the 
facility and, on that basis, make independent and binding 
determinations concerning the extent to which the skilled 
nursing facility meets such requirements. 
"(4) Investigation of complaints and monitoring compli- 
ance. — Each State shall maintain procedures and adequate 
staff to— 

"(A) investigate complaints of violations of requirements 
by skilled nursing facilities, and 

"(B) monitor, on-site, on a regular, as needed basis, a 
skilled nursing facility's compliance with the requirements 
of subsections (b), (c), and (d), if— 

"(i) the facility has been found not to be in compli- 
ance with such requirements and is in the process of 
correcting deficiencies to achieve such compliance; 

"(ii) the facility was previously found not to be in 
compHance with such requirements, has corrected defi- 
ciencies to achieve such compliance, and verification of 
continued compliance is indicated; or 

"(iii) the State has reason to question the compliance 
of the facility with such requirements. 
A State may maintain and utilize a specialized team (including 
an attorney, an auditor, and appropriate health care profes- 
sionals) for the purpose of identifying, surveying, gathering and 
preserving evidence, and carrying out appropriate enforcement 
actions against chronically substandard skilled nursing 
facilities. 

"(5) Disclosure of results of inspections and activities.— 
"(A) PuBuc information.— Each State, and the Sec- 
retary, shall make available to the public — 

"(i) information respecting all surveys and certifi- 
cations made respecting skilled nursing facilities, 
including statements of deficiencies and plans of 
correction. 

Reports. ;y "(ii) copies of cost reports of such facilities filed under 

this title or title XIX, 

"(iii) copies of statements of ownership under section 
1124, and 

"(iv) information disclosed under section 1126. 
"(B) Notice to ombudsman.— Each State shall notify the 
State long-term care ombudsman (established under section 
307(a)(12) of the Older Americans Act of 1965) of the State's 
findings of noncompliance with any of the requirements of 
subsections (b), (c), and (d), with respect to a skilled nursing 
* facility in the State. 

"(C) Notice to physicians and skilled nursing faciuty 
administrator ucensing board.— If a State finds that a 



Copy read " "(C) '. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-179 



skilled nursing facility has provided substandard quality of 
care, the State shall notify — 

"(i) the attending physician of each resident with 
respect to which such finding is made, and 

*'(ii) the State board responsible for the licensing of 
the skilled nursing facility administrator at the facility. 
"(D) Access to fraud control units.— Each State shall 
provide its State medicaid fraud and abuse control unit 
(established under section 1903(q)) with access to all 
information of the State agency responsible for surveys and 
certifications under this subsection.", 
(c) Posting Survey Results. — Section 1864(a) of such Act (42 
U.S.C. 1395aa(a)) is amended by inserting, after "readily available 
form and place" in the fifth sentence, the following: and require 
(in the case of skilled nursing facilities) the posting in a place readily 
accessible to patients (and patients' representatives),". 

SEC. 4203. ENFORCEMENT PROCESS. 

(a) State Requirement. — Title XVIII of the Social Security Act is 
amended — 

(1) in section 1864(d) (42 U.S.C. 1395aa(d)), as added by section 
4201(a)(2) and as amended by section 4202(a)(1) of this Act, by 
inserting before the period at the end the following: "and the 
establishment of remedies under sections 1819(h)(2)(B) and 
1819(h)(2)(C) (relating to establishment and application of rem- 
edies)"; and 

(2) by adding at the end of section 1819 of such Act, as added 
by section 4201(a)(3) and as amended by section 4202(a)(2), the 
end the following new subsection: 

"(h) Enforcement Process.— 

"(1) In general. — If a State finds, on the basis of a standard, 
extended, or partial extended survey under subsection (g)(2) or 
otherwise, that a skilled nursing facility no longer meets a 
requirement of subsection (b), (c), or (d), and further finds that 
the facility's deficiencies — 

"(A) immediately jeopardize the health or safety of its 
residents, the State shall recommend to the Secretary that 
the Secretary take such action as described in para- 
graph (2)(A)(i); or 

"(B) do not immediately jeopardize the health or safety of 
its residents, the State may recommend to the Secretary 
that the Secretary take such action as described in para- 
graph (2)(A)(ii). 

If a State finds that a skilled nursing facility meets the require- 
ments of subsections (b), (c), and (d), but, as of a previous period, 
did not meet such requirements, the State may recommend a 
civil money penalty under paragraph (2)(B)(ii) for the days in 
which it finds that the facility was not in compliance with such 
requirements. 
"(2) Secretarial authority. — 

"(A) In general.— With respect to any skilled nursing 
facility in a State, if the Secretary finds, or pursuant to a 
recommendation of the State under paragraph (1) finds, 
that a skilled nursing facility no longer meets a require- 
ment of subsection (b), (c), (d), or (e), and further finds that 
the facility's deficiencies — 



Copy read " "(C)". 



101 STAT. 1330-180 PUBLIC LAW 100-203— DEC. 22, 1987 



"(i) immediately jeopardize the health or safety of its 
residents, the Secretary shall take immediate action to 
remove the jeopardy and correct the deficiencies 
through the remedy specified in subparagraph (BXiii), 
or terminate the facility's participation under this title 
and may provide, in addition, for one or more of the 
other remedies described in subparagraph (B); or 

"(ii) do not immediately jeopardize the health or 
safety of its residents, the Secretary may impose any of 
the remedies described in subparagraph (B). 
Nothing in this subparagraph shall be construed as restrict- 
ing the remedies available to the Secretary to remedy a 
skilled nursing facility's deficiencies. If the Secretary finds, 
or pursuant to the recommendation of the State under 
paragraph (1) finds, that a skilled nursing facility meets 
such requirements but, as of a previous period, did not meet 
such requirements, the Secretary may provide for a civil 
money penalty under subparagraph (BXii) for the days on 
which he finds that the facility was not in compliance with 
such requirements. 

"(B) Specified remedies.— The Secretary may take the 
following actions with respect to a finding that a facility 
has not met an applicable requirement: 

"(i) Denial of payment. — The Secretary may deny 
any further payments under this title with respect to 
all individuals entitled to benefits under this title in 
the facility or with respect to such individuals admitted 
to the facility after the effective date of the finding. 

"(ii) Authority with respect to civil money pen- 
alties.— The Secretary may impose a civil money pen- 
alty in an amount not to exceed $10,000 for each day of 
noncompliance and the Secretary shall impose and 
collect such a penalty in the same manner as civil 
money penalties are imposed and collected under sec- 
tion 1128A. 

"(iii) Appointment of temporary management.— In 
consultation with the State, the Secretary may appoint 
temporary management to oversee the operation of the 
facility and to assure the health and safety of the 
facility's residents, where there is a need for temporary 
management while — 

"(I) there is an orderly closure of the facility, or 
"(II) improvements are made in order to bring 
the facility into compliance with all the require- 
ments of subsections (b), (c), and (d). 
The temporary management under this clause shall 
not be terminated under subclause (II) until the Sec- 
retary has determined that the facility has the manage- 
ment capability to ensure continued compliance with 
all the requirements of subsections (b), (c), and (d). 
The Secretary shall specify criteria, as to when and how 
each of such remedies is to be applied, the amounts of any 
fines, and the severity of each of these remedies, to be used 
in the imposition of such remedies. Such criteria shall be 
designed so as to minimize the time between the identifica- 
tion of violations and final imposition of the remedies and 
shall provide for the imposition of incrementally more 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-181 



severe fines for repeated or uncorrected deficiencies. In 
addition, the Secretary may provide for other specified 
remedies, such as directed plans of correction. 

"(C) Continuation of payments pending remedi- 
ation. — The Secretary may continue payments, over a 
period of not longer than 6 months, under this title with 
respect to a skilled nursing facility not in compliance with a 
requirement of subsection (b), (c), or (d), if— 

"(i) the State survey agency finds that it is more 
appropriate to take alternative action to assure compli- 
ance of the facility with the requirements than to 
terminate the certification of the facility, 

"(ii) the State has submitted a plan and timetable for 
corrective action to the Secretary for approval and the 
Secretary approves the plan of corrective action, and 
"(iii) the facility agrees to repay to the Federal 
Government payments received under this subpara- 
graph if the corrective action is not taken in accord- 
ance with the approved plan and timetable. 
The Secretary shall establish guidelines for approval of 
corrective actions requested by States under this subpara- 
graph. 

"(D) Assuring prompt compliance. — If a skilled nursing 
facility has not complied with any of the requirements of 
subsections (b), (c), and (d), within 3 months after the date 
the facility is found to be out of compliance with such 
requirements, the Secretary shall impose the remedy de- 
scribed in subparagraph (B)(i) for all individuals who are 
admitted to the facility after such date. 

"(E) Repeated noncompliance. — In the case of a skilled 
nursing facility which, on 3 consecutive standard surveys 
conducted under subsection (gX2), has been found to have 
provided substandard quality of care, the Secretary shall 
(regardless of what other remedies are provided) — 

"(i) impose the remedy described in subparagraph 
(BXi), and 

"(ii) monitor the facility under subsection (g)(4)(B), 
until the facility has demonstrated, to the satisfaction of 
the Secretary, that it is in compliance with the require- 
ments of subsections Od), (c), and (d), and that it will remain 
in compliance with such requirements. 
"(3) Effective period of denial of payment.— A finding to 
deny payment under this subsection shall terminate when the 
Secretary finds that the facility is in substantial compliance 
with all the requirements of subsections (b), (c), and (d). 

"(4) Immediate termination of participation for faciuty 
where secretary finds noncompuance and immediate jeop- 
ardy. — If the Secretary finds that a skilled nursing facility has 
not met a requirement of subsection (b), (c), or (d), and finds that 
the failure immediately jeopardizes the health or safety of its 
residents, the Secretary shall take immediate action to remove 
the jeopardy and correct the deficiencies through the remedy 
specified in paragraph (2XBXiii), or the Secretary shall termi- 
nate the facility's participation under this title. If the facility's 
participation under this title is terminated, the State shall 
provide for the safe and orderly transfer of the residents eligible 



101 STAT. 1330-182 PUBLIC LAW 100-203— DEC. 22, 1987 



under this title consistent with the requirements of subsection 

(c)(2). 

"(5) Construction.— The remedies provided under this 
subsection are in addition to those otherwise available under 
State or Federal law and shall not be construed as limiting such 
other remedies, including any remedy available to an individual 
at common law. The remedies described in clauses (i), (iii), and 
(iv) of paragraph (2)(A) may be imposed during the pendency of 
any hearing. 

"(6) Sharing of information.— Notwithstanding any other 
provision of law, all information concerning skilled nursing 
facilities required by this section to be filed with the Secretary 
or a State agency shall be made available to Federal or State 
employees for purposes consistent with the effective administra- 
tion of programs established under this title and title XIX, 
including investigations by State medicaid fraud control units.". 

SEC. 4204. EFFECTIVE DATES. 

(a) New Requirements and Survey and Certification Proc- 
ess. — Except as otherwise specifically provided in section 1819 of the 
Social Security Act, the amendments made by this part shall apply 
to extended care services furnished on or after October 1, 1990, 
without regard to whether regulations to implement such amend- 
ments are promulgated by such date. 

(b) Waiver of Paperwork Reduction.— Chapter 35 of title 44, 
United States Code, shall not apply to information required for 
purposes of carrying out this part and implementing the amend- 
ments made by this part. 

SEC. 4205. ANNUAL REPORT. 

The Secretary of Health and Human Services shall report to the 
Congress annually on the extent to which skilled nursing facilities 
are complying with the requirements of subsections (b), (c), and (d) of 
section 1819 of the Social Security Act (as added by the amendments 
made by this part) and the number and type of enforcement actions 
taken by States and the Secretary under section 1819(h) of such Act 
(as added by section 4203 of this Act). 

SEC. 4206. CONSTRUCTION. 

42 use l395i-3. Section 1819 of the Social Security Act is amended by adding at 
the end the following new subsection: 

"(i) Construction.— Where requirements or obligations under 
this section are identical to those provided under section 1919 of this 
Act, the fulfillment of those requirements or obligations under 
section 1919 shall be considered to be the fulfillment of the cor- 
responding requirements or obligations under this section.". 

PART 2— MEDICAID PROGRAM 

SEC. 4211. REQUIREMENTS FOR NURSING FACILITIES. 

(a) Specification of Faciuty Requirements.— Title XIX of the 
Social Security Act is amended — 

(1) by redesignating section 1922 as section 1923, 

(2) by redesignating section 1919 as section 1922 and by 
transferring and inserting such section after section 1921, and 

(3) by inserting after section 1918 the following new section: 



42 use 1395i-3 
note. 



42 use 1395i-3 
note. 



42 use 1396s. 
42 use 1396r, 
1396r-3. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-1 

"requirements FOR NURSING FACIUTIES 

"Sec. 1919. (a) Nursing Faciuty Defined.— In this title, the term 42 USC I396r. 
'nursing facility' means an institution (or a distinct part of an 
institution) which — 

"(1) is primarily engaged in providing to residents — 

"(A) skilled nursing care and related services for resi- 
dents who require medical or nursing care, 

"(B) rehabilitation services for the rehabilitation of in- 
jured, disabled, or sick persons, or 

"(C) on a regular basis, health-related care and services to 
individuals who because of their mental or physical condi- 
tion require care and services (above the level of room and 
board) which can be made available to them only through 
institutional facilities, 
and is not primarily for the care and treatment of mental 
diseases; 

"(2) has in effect a transfer agreement (meeting the require- 
ments of section 1861(1)) with one or more hospitals having 
agreements in effect under section 1866; and 

"(3) meets the requirements for a nursing facility described in 
subsections (b), (c), and (d) of this section. 
Such term also includes any facility which is located in a State on 
an Indian reservation and is certified by the Secretary as meeting 
the requirements of paragraph (1) and subsections (b), (c), and (d). 
"(b) Requirements Relating to Provision of Services. — 
"(1) Quality of ufe. — 

"(A) In general. — A nursing facility must care for its 
residents in such a manner and in such an environment as 
will promote maintenance or enhancement of the quality of 
life of each resident. 

"(B) QUAUTY ASSESSMENT AND ASSURANCE. — A nursing 

facility must maintain a quality assessment and assurance 
committee, consisting of the director of nursing services, a 
physician designated by the facility, and at least 3 other 
members of the facility's staff, which (i) meets at least 
quarterly to identify issues with respect to which quality 
assessment and assurance activities are necessary and (ii) 
develops and implements appropriate plans of action to 
correct identified quality deficiencies. 
"(2) Scope of services and activities under plan of care. — 
A nursing facility must provide services and activities to attain 
or maintain the highest practicable physical, mental, and 
psychosocial well-being of each resident in accordance with a 
written plan of care which — 

"(A) describes the medical, nursing, and psychosocial 
needs of the resident and how such needs will be met; 

"(B) is initially prepared, with the participation to the 
extent practicable of the resident or the resident's family or 
legal representative, by a team which includes the resi- 
dent's attending physician and a registered professional 
nurse with responsibility for the resident; and 

"(C) is periodically reviewed and revised by such team 
after each assessment under paragraph (3). 
"(3) Residents' assessment. — 

"(A) Requirement. — A nursing facility must conduct a 
comprehensive, accurate, standardized, reproducible assess- 



101 STAT. 1330-184 PUBLIC LAW 100-203— DEC. 22, 1987 

ment of each resident's functional capacity, which assess- 
ment — 

**(i) describes the resident's capability to perform 
daily life functions and significant impairments in 
functional capacity; ' 
"(ii) is based on a uniform minimum data set speci- 
; fied by the Secretary under subsection (f)(6)(A); 

"(iii) in the case of a resident eligible for benefits 
under this title, uses an instrument which is specified 
by the State under subsection (e)(5); and 

"(iv) in the case of a resident eligible for benefits 
under part A of title XVIII, includes the identification 
of medical problems. 
_ "(B) Certification. — 

"(i) In general. — Each such assessment must be con- 
ducted or coordinated (with the appropriate participa- 
tion of health professionals) by a registered profes- 
sional nurse who signs and certifies the completion of 
the assessment. Each individual who completes a por- 
tion of such an assessment shall sign and certify as to 
- . the accuracy of that portion of the assessment. 

"(ii) Penalty for falsification. — i 
"(I) An individual who willfully and knowingly | 
certifies under clause (i) a material and false state- 
ment in a resident assessment is subject to a civil 
money penalty of not more than $1,000 with re- 
spect to each assessment. 

"(II) An individual who willfully and knowingly 
causes another individual to certify under clause (i) 
a material and false statement in a resident assess- 
ment is subject to a civil money penalty of not 
more than $5,000 with respect to each assessment. 

"(Ill) The Secretary shall provide for imposition 
of civil money penalties under this clause in a 
manner similar to that for the imposition of civil 
money penalties under section 11 28 A. 
"(iii) Use of independent assessors. — If a State 
determines, under a survey under subsection (g) or 
otherwise, that there has been a knowing and willful 
certification of false assessments under this paragraph, 
the State may require (for a period specified by the 
State) that resident assessments under this paragraph 
be conducted and certified by individuals who are 
independent of the facility and who are approved by 
the State. 
"(C) Frequency.— 

"(i) In general. — Such an assessment must be con- 
ducted — 

"(I) promptly upon Ot)ut no later than 4 days 
after the date of) admission for each individual 
admitted on or after October 1, 1990, and by not 
later than October 1, 1991, for each resident of the 
facility on that date; 

"(II) promptly after a significant change in the 
resident's physical or mental condition; and 

"(III) in no case less often than once every 12 
months. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-185 



"(ii) Resident review.— The nursing facility must 
examine each resident no less frequently than once 
every 3 months and, as appropriate, revise the resi- 
dent s assessment to assure the continuing accuracy of 
the assessment. 
"(D) Use. — The results of such an assessment shall be 
used in developing, reviewing, and revising the resident's 
plan of care under paragraph (2). 

"(E) Coordination.— Such assessments shall be coordi- 
nated with any State-required preadmission screening pro- 
gram to the maximum extent practicable in order to avoid 
duplicative testing and effort. 
"(F) Requirements relating to preadmission screening 

FOR MENTALLY ILL AND MENTALLY RETARDED INDIVIDUALS.— 

A nursing facility must not admit, on or after January 1, 
1989, any new resident who — 

"(i) is mentally ill (as defined in subsection (eXTXGXi)) 
unless the State mental health authority has deter- 
mined (based on an independent physical and mental 
evaluation performed by a person or entity other than 
the State mental health authority) prior to admission 
that, because of the physical and mental condition of 
the individual, the individual requires the level of serv- 
ices provided by a nursing facility, and, if the individ- 
ual requires such level of services, whether the individ- 
ual requires active treatment for mental illness, or 
"(ii) is mentally retarded [as defined in subsection 
(eX7XGXii)) unless the State mental retardation or 
developmental disability authority has determined 
prior to admission that, because of the physical and 
mental condition of the individual, the individual re- 
quires the level of services provided by a nursing facil- 
ity, and, if the individual requires such level of services, 
whether the individual requires active treatment for 
mental retardation. 
(4) Provision of services and activities.— 

"(A) In general.— To the extent needed to fulfill all 
plans of care described in paragraph (2), a nursing facility 
must provide (or arrange for the provision of) — 

"(i) nursing and related services and specialized re- 
habilitative services to attain or maintain the highest 
practicable physical, mental, and psychosocial well- 
being of each resident; 

"(ii) medically-related social services to attain or 
maintain the highest practicable physical, mental, and 
psychosocial well-being of each resident; 

"(iii) pharmaceutical services (including procedures 
that assure the accurate acquiring, receiving, dispens- 
ing, and administering of all drugs and biologicals) to 
meet the needs of each resident; 

"(iv) dietary services that assure that the meals meet 
the daily nutritional and special dietary needs of each 
resident; 

"(v) an on-going program, directed by a qualified 
professional, of activities designed to meet the interests 
and the physical, mental, and psychosocial well-being 
of each resident; and 



101 STAT. 1330-186 PUBLIC LAW 100-203— DEC. 22, 1987 



"(vi) routine dental services (to the extent covered 
under the State plan) and emergency dental services to • 
meet the needs of each resident. 
The services provided or arranged by the facility must meet 
professional standards of quality. 

"(B) Qualified persons providing services. — Services | 
described in clauses (i), (ii), (iii), (iv), and (vi) of subpara- 
graph (A) must be provided by qualified persons in accord- 
ance with each resident's written plan of care. 
"(C) Required nursing care; faciuty waivers.— 

**(i) General requirements.— With respect to nurs- 
ing facility services provided on or after October 1, 
1990, a nursing facility — ! 
"(I) except as provided in clause (ii), must provide ! 
24-hour licensed nursing services which are suffi- 
cient to meet the nursing needs of its residents, 
and 

"(II) except £18 provided in clause (ii), must use 
the services of a registered nurse for at least 8 
consecutive hours a day, 7 days a week. | 
"(ii) Faciuty waivers. — I 
"(i) Waiver by state. — A State may waive thei 
requirement of subclause (I) or (II) of clause (i) with 
respect to a facility if — I 
"(I) the facility demonstrates to the satisfaction! 
of the State that the facility has been unable, 
despite diligent efforts (including offering wages at 
the community prevailing rate for nursing facili- 
ties), to recruit appropriate personnel, 

"(II) the State determines that a waiver of the 
requirement will not endanger the health or safety 
of individuals staying in the facility, and 

"(III) the State finds that, for any such periods in 
which licensed nursing services are not available, a 
registered nurse or a physician is obligated to re-| 
v; spond immediately to telephone calls from the 

facility. 

A waiver under this clause shall be subject to annual 
review and to the review of the Secretary and subject to 
clause (ii) shall be accepted by the Secretary for pur- 
poses of this title to the same extent as is the State's 
certification of the facility. In granting or renewing a 
waiver, a State may require the facility to employ other 
qualified, licensed personnel. 

"(ii) Assumption of waiver authority by sec- ! 
RETARY.— If the Secretary determines that a State has 
shown a clear pattern and practice of allowing waivers 
in the absence of diligent efforts by facilities to meet 
the staffing requirements, the Secretary shall assume 
and excercise the authority of the State to grant 
waivers. , ' 

"(5) Required training of nurse aides.— ^ \ 

"(A) In general. — A nursing facility must not use (on a 
full-time, temporary, per diem, or other basis) any individ- 
ual, who is not a licensed health professional (as defined in 
subparagraph (E)), as a nurse aide in the facility on or after 



i 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-187 



January 1, 1990, for more than 4 months unless the individ- 
ual — 

"(i) has completed a training and competency evalua- 
tion program, or a competency evaluation program, 
approved by the State under subsection (eXlXA), and 
"(ii) is competent to provide such services. 

"(B) Offering competency evaluation programs for 
CURRENT EMPLOYEES. — A nursing facility must provide, for 
individuals used as a nurse aide by the facility as of July 1, 
1989, for a competency evaluation program approved by the 
State under subsection (eXD and such preparation as may 
be necessary for the individual to complete such a program 
by January 1, 1990. 

"(C) Competency. — The nursing facility must not permit 
an individual, other than in a training and competency 
evaluation program approved by the State, to serve as a 
nurse aide or provide services of a type for which the 
individual has not demonstrated competency and must not 
use such an individual as a nurse aide unless the facility 
has inquired of the State registry established under subsec- 
tion (eX2XA) as to information in the registry concerning 
the individual. 

"(D) Re-training required.— For purposes of subpara- 
graph (A), if, since an individual's most recent completion 
of a training and competency evaluation program, there 
has been a continuous period of 24 consecutive months 
during none of which the individual performed nursing or 
nursing-related services for monetary compensation, such 
individual shall complete a new training and competency 
evaluation program. 

"(E) Regular in-service education.— The nursing facil- 
ity must provide such regular performance review and 
regular in-service education as assures that individuals 
used as nurse aides are competent to perform services as 
nurse aides, including training for individuals providing 
nursing and nursing-related services to residents with cog- 
nitive impairments. 

"(F) Nurse aide defined. — In this paragraph, the term 
'nurse aide' means any individual providing nursing or 
nursing-related services to residents in a nursing facility, 
but does not include an individual — 

"(i) who is a licensed health professional (as defined 
I in subparagraph (G)), or 

I "(ii) who volunteers to provide such services without 

monetary compensation. 
"(G) Licensed health professional defined.— In this 
paragraph, the term 'licensed health professional' means a 
physician, physician assistant, nurse practitioner, physical, 
i speech, or occupational therapist, registered professional 
J nurse, licensed practical nurse, or licensed or certified 
I social worker. 

"(6) Physiclan supervision and clinical records.— a nurs- 
ling facility must— 

1 "(A) require that the health care of every resident be 
j provided under the supervision of a physician; 
I "(B) provide for having a physician available to furnish 
; necessary medical care in case of emergency; and 

\ 

I 



101 STAT. 1330-188 PUBLIC LAW 100-203— DEC. 22, 1987 



"(C) maintain clinical records on all residents, which 
records include the plans of care (described in paragraph 

(2) ) and the residents' assessments (described in paragraph 

(3) ), as well as the results of any pre-admission screening 
conducted under subsection (eX7). 

"(7) Required social SERviCES.~In the case of a nursing 
facility with more than 120 beds, the facility must have at least 
one social worker (with at least a bachelor's degree in social 
work or similar professional qualifications) employed full-time 
to provide or assure the provision of social services. 
"(c) Requirements Relating to Residents' Rights.— 
"(1) General rights. — 

"(A) Specified rights. — A nursing facility must protect 
and promote the rights of each resident, including each of 
the following rights: 

"(i) Free choice.— The right to choose a personal 
attending physician, to be fully informed in advance 
about care and treatment, to be fully informed in 
advance of any changes in care or treatment that may 
affect the resident's well-being, and (except with re-j 
spect to a resident adjudged incompetent) to participate j 
in planning care and treatment or changes in care and I 
treatment. ' 

"(ii) Free from restraints. — The right to be free 
from physical or mental abuse, corporal punishment, 
involuntary seclusion, and any physical or chemical 
restraints imposed for purposes of discipline or conven- 
ience and not required to treat the resident's medical 
symptoms. Restraints may only be imposed — 

"(I) to ensure the physical safety of the resident 
or other residents, and 

"(II) only upon the written order of a physician 
that specifies the duration and circumstances i 
under which the restraints are to be used (except 
in emergency circumstances specified by the Sec- 
retary) until such an order could reasonably be 
obtained. 

"(iii) Privacy. — The right to privacy with regard to 
accommodations, medical treatment, written and tele- 
phonic communications, visits, and meetings of family 
and of resident groups. 

"(iv) CoNFiDENTiAUTY.— The right to confidentiality 
of personal and clinical records, 
"(v) Accommodation of needs. — The right- 
ed) to reside and receive services with reason- 
able accommodations of individual needs and pref- 
erences, except where the health or safety of the 
individual or other residents would be endangered, 
and 

"(II) to receive notice before the room or room- 
mate of the resident in the facility is changed. 
♦ "(vi) Grievances.— The right to voice grievances 

with respect to treatment or care that is (or fails to be) 
furnished, without discrimination or reprisal for voic- . 
ing the grievances and the right to prompt efforts by 
the facility to resolve grievances the resident may 



I 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-189 



have, including those with respect to the behavior of 
other residents. 

"(vii) Participation in resident and family 
GROUPS. — The right of the resident to organize and 
participate in resident groups in the facihty and the 
right of the resident's family to meet in the facility 
with the families of other residents in the facility. 

"(viii) Participation in other activities.— The 
right of the resident to participate in social, religious, 
and community activities that do not interfere with the 
rights of other residents in the facility. 

^2 "(ix) Examination of survey results.— The right 
to examine, upon reasonable request, the results of the 
most recent survey of the facility conducted by the 
Secretary or a State with respect to the facility and any 
plan of correction in effect with respect to the facility. 

^3 "(x) Other rights. — Any other right established 
by the Secretary. 
Clause (iii) shall not be construed as requiring the provision 
of a private room. 

"(B) Notice of rights. — A nursing facility must— 

"(i) inform each resident, orally and in writing at the 
time of admission to the facility, of the resident's legal 
rights during the stay at the facility; 

"(ii) make available to each resident, upon reason- 
able request, a written statement of such rights (which 
statement is updated upon changes in such rights); 

"(iii) inform each resident who is entitled to medical 
assistance under this title — 

"(I) at the time of admission to the facility or, if 
later, at the time the resident becomes eligible for 
such assistance, of the items and services (includ- 
ing those specified under section 1902(a)(28)(B)) 
that are included in nursing facility services under 
the State plan and for which the resident may not 
be charged (except as permitted in section 1916), 
and of those other items and services that the 
facility offers and for which the resident may be 
charged and the amount of the charges for such 
items and services, and 

"(II) of changes in the items and services de- 
scribed in subclause (I) and of changes in the 
charges imposed for items and services described in 
that subclause; and 
"(iv) inform each other resident, in writing before or 
at the time of admission and periodically during the 
resident's stay, of services available in the facility and 
of related charjges for such services, including any 
charges for services not covered under title XVIII or by 
the facility's basic per diem charge. 
The written description of legal rights under this subpara- 
graph shall include a description of the protection of per- 
sonal funds under paragraph (6) and a statement that a 



*'Copy read " "(ix)". 
"Copy read " "(x)". 
"Copy read " "(xi)". 



101 STAT. 1330-190 PUBLIC LAW 100-203— DEC. 22, 1987 



resident may file a complaint with a State survey and 
certification agency respecting resident abuse and neglect 
and misappropriation of resident property in the facility. 

"(C) Rights of incompetent residents.— In the case of a 
resident adjudged incompetent under the laws of a State, 
the rights of the resident under this title shall devolve 
upon, and, to the extent judged necessary by a court of 
competent jurisdiction, be exercised by, the person ap- 
pointed under State law to act on the resident's behalf. 

"(D) Use of psychopharmacologic drugs.— Psycho- 
pharmacologic drugs may be administered only on the 
orders of a physician and only as part of a plan (included in 
the written plan of care described in paragraph (2)) de- 
signed to eliminate or modify the symptoms for which the 
drugs are prescribed and only if, at least annually an 
independent, external consultant reviews the appropriate- 
ness of the drug plan of each resident receiving such drugs. 
"(2) Transfer and discharge rights.— 

"(A) In general. — A nursing facility must permit each i 
resident to remain in the facility and must not transfer or 
discharge the resident from the facility unless — 

"(i) the transfer or discharge is necessary to meet the 
resident's welfare and the resident's welfare cannot be I 
met in the facility; | 
"(ii) the transfer or discharge is appropriate because j 
the resident's health has improved sufficiently so the 
resident no longer needs the services provided by the | 
facility; | 
"(iii) the safety of individuals in the facility is 
endangered; 

"(iv) the health of individuals in the facility would 
otherwise be endangered; 

"(v) the resident has failed, after reasonable and 
appropriate notice, to pay (or to have paid under this 
title or title XVIII on the resident's behalf) an allow- 
able charge imposed by the facility for an item or 
service requested by the resident and for which a 
charge may be imposed consistent with this title and 
title XVIII; or 

"(vi) the facility ceases to operate. 
In each ®* of the cases described in clauses (i) through (iv), 
the basis for the transfer or discharge must be documented 
in the resident's clinical record. In the cases described in 
clauses (i) and (ii), the documentation must be made by the 
resident's physician, and in the case described in clause (iv) 
the documentation must be made by a physician. For pur- 
poses of clause (v), in the case of a resident who becomes 
eligible for assistance under this title after admission to the 
facility, only charges which may be imposed under this title 
shall be considered to be allowable. 
"(B) Pre-transfer and pre-discharge notice.— 

"(i) In general. — Before effecting a transfer or dis- 
charge of a resident, a nursing facility must— 



•* Copy read "In the each". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-191 

"(I) notify the resident (and, if known, an imme- 
diate family member of the resident or legal rep- 
resentative) of the transfer or discharge and the 
reasons therefor, 

"(II) record the reasons in the resident's clinical 
record (including any documentation required 
under subparagraph (A)), and 

"(III) include in the notice the items described in 
clause (iii). 

"(ii) Timing of notice.— The notice under clause (i)(I) 
must be made at least 30 days in advance of the 
resident's transfer or discharge except — 

"(I) in a case described in clause (iii) or (iv) of 
subparagraph (A); 

"(II) in a case described in clause (ii) of subpara- 
graph (A), where the resident's health improves 
sufficiently to allow a more immediate transfer or 
discharge; 

"(III) in a case described in clause (i) of subpara- 
graph (A), where a more immediate transfer or 
discharge is necessitated by the resident's urgent 
medical needs; or 

"(IV) in a case where a resident has not resided 
in the facility for 30 days. 
In the case of such exceptions, notice must be given as 
man> days before the date of the transfer or discharge 
as is practicable. 

"(iii) Items included in notice. — Each notice under 
clause (i) must include — 

"(I) for transfers or discharges effected on or 
after October 1, 1989, notice of the resident's right 
to appeal the transfer or discharge under the State 
process established under subsection (eX3); 

"(II) the name, mailing address, and telephone 
number of the State long-term care ombudsman 
(established under section 307(aX12) of the Older 
Americans Act of 1965); 

"(III) in the case of residents with developmental 
disabilities, the mailing address and telephone 
number of the agency responsible for the protec- 
tion and advocacy system for developmentally dis- 
abled individuals established under part C of the 
Developmental Disabilities Assistance and Bill of 
Rights Act; and 

'(IV) in the case of mentally ill residents (as 
defined in subsection (eX7XGXi)), the mailing ad- 
dress and telephone number of the agency respon- 
sible for the protection and advocacy system for 
mentally ill individuals established under the 
Protection and Advocacy for Mentally 111 Individ- 
uals Act. 

"(C) Orientation.— A nursing facility must provide suffi- 
cient preparation and orientation to residents to ensure 
safe and orderly transfer or discharge from the facility. 
"(D) Notice on bed-hold poucy and readmission.— 

"(i) Notice before transfer. — Before a resident of a 
nursing facility is transferred for hospitalization oi 



101 STAT. 1330-192 PUBLIC LAW 100-203— DEC. 22, 1987 

therapeutic leave, a nursing facility must provide writ- 
ten information to the resident and an immediate 
family member or legal representative concerning — 
"(I) the provisions of the State plan under this 
title regarding the period (if any) during which the 
resident will be permitted under the State plan to 
return and resume residence in the facility, and 
"(II) the policies of the facility regarding such a 
period, which policies must be consistent with 
clause (iii). 

"(ii) Notice upon transfer. — At the time of transfer 
of a resident to a hospital or for therapeutic leave, a 
nursing facility must provide written notice to the 
resident and an immediate family member or legal 
representative of the duration of any period described 
in clause (i). 

"(iii) Permitting resident to return.— A nursing 
facility must establish and follow a written policy 
under which a resident — 

"(I) who is eligible for medical assistance for 
nursing facility services under a State plan, 

"(II) who is transferred from the facility for hos- 
; - pitalization or therapeutic leave, and 

"(III) whose hospitalization or therapeutic leave 
exceeds a period paid for under the State plan for 
the holding of a bed in the facility for the resident, 
will be permitted to be readmitted to the facility imme- 
diately upon the first availability of a bed in a 
semiprivate room in the facility if, at the time of 
) r readmission, the resident requires the services provided 

by the facility. 

"(3) Access and visitation rights.— A nursing facility 
must — 

"(A) permit immediate access to any resident by any 
representative of the Secretary, by any representative of 
the State, by an ombudsman or agency described in 
subclause (II), (III), or (IV) of paragraph (2XBXiii), or by the 
resident's individual physician; 

"(B) permit immediate access to a resident, subject to the 
resident's right to deny or withdraw consent at any time, by 
immediate family or other relatives of the resident; 

"(C) permit immediate access to a resident, subject to 
reasonable restrictions and the resident's right to deny or 
withdraw consent at any time, by others who are visiting 
with the consent of the resident; 

"(D) permit reasonable access to a resident by any entity 
or individual that provides health, social, legal, or other 
services to the resident, subject to the resident's right to 
deny or withdraw consent at any time; and 

"(E) permit representatives of the State ombudsman (de- 
scribed in paragraph (2XBXiiiXII)), with the permission of 
the resident (or the resident's legal representative) and 
* consistent with State law, to examine a resident's clinical 

records. 

"(4) Equal access to quauty care.— 

"(A) In general. — A nursing facility must establish and 
maintain identical policies and practices regarding trans- 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330- 



fer, discharge, and the provision of services required under 
the State plan for all individuals regardless of source of 
payment. 

(B) Construction.— 

"(i) Nothing prohibiting any charges for non- 
MEDiCAiD PATIENTS. — Subparagraph (A) shall not be 
construed as prohibiting a nursing facility from charg- 
ing any amount for services furnished, consistent with 
the notice in paragraph (IXB) describing such charges. 

"(ii) No ADDITIONAL SERVICES REQUIRED.— Subpara- 
graph (A) shall not be construed as requiring a State to 
offer additional services on behalf of a resident than 
are otherwise provided under the State plan. 
"(5) Admissions Policy. — 

"(A) Admissions. — With respect to admissions practices, a 
nursing facility must — 

"(iXD not require individuals applying to reside or 
residing in the facility to waive their rights to benefits 
under this title or title XVIII, (II) not require oral or 
written assurance that such individuals are not eligible 
for, or will not apply for, benefits under this title or 
title XVIII, and (III) prominently display in the facility 
written information, and provide to such individuals 
oral and written information, about how to apply for 
and use such benefits and how to receive refunds for 
previous payments covered by such benefits; 

"(ii) not require a third party guarantee of payment 
to the facility as a condition of admission (or expedited 
admission) to, or continued stay in, the facility; and 
"(iii) in the case of an individual who is entitled to 
medical assistance for nursing facility services, not 
charge, solicit, accept, or receive, in addition to any 
amount otherwise required to be paid under the State 
plan under this title, any gift, money, donation, or 
other consideration as a precondition of admitting (or 
expediting the admission of) the individual to the facil- 
ity or as a requirement for the individual's continued 
stay in the facility. 
"(B) Construction.— 

"(i) No PREEMPTION OF STRICTER STANDARDS. — 

Subparagraph (A) shall not be construed as preventing 
States or political subdivisions therein from prohibit- 
ing, under State or local law, the discrimination 
against individuals who are entitled to medical assist- 
ance under the State plan with respect to admissions 
practices of nursing facilities. 

"(ii) Contracts with legal representatives.— 
Subparagraph (AXii) shall not be construed as prevent- 
ing a facility from requiring an individual, who has 
legal access to a resident's income or resources avail- 
able to pay for care in the facility, to sign a contract 
(without incurring personal financial liability) to pro- 
vide payment from the resident's income or resources 
for such care. 

"(iii) Charges for additional services requested.— 
Subparagraph (AXiii) shall not be construed as prevent- 
ing a facility from charging a resident, eligible for 



19-139 0 - 88 — 7 ( 203) 



101 STAT. 1330-194 PUBLIC LAW 100-203— DEC. 22, 1987 



medical assistance under the State plan, for items or 
services the resident has requested and received and 
that are not specified in the State plan as included in 
the term 'nursing facility services'. 

"(iv) Bona fide contributions.— Subparagraph ( 
(AXiii) shall not be construed as prohibiting a nursing 
facility from soliciting, accepting, or receiving a chari- 
table, religious, or philanthropic contribution from an 
organization or from a person unrelated to the resident 
(or potential resident), but only to the extent that such 
contribution is not a condition of admission, expediting ! 
admission, or continued stay in the facility. 
"(6) Protection of resident funds. — 

"(A) In general.— The nursing facility— | 

"(i) may not require residents to deposit their per- 
sonal funds with the facility, and 

"(ii) once the facility accepts the written authoriza- 
tion of the resident, must hold, safeguard, and account 
for such personal funds under a system established and 
maintained by the facility in accordance with this para- |* 
graph. [ 
"(B) Management of personal funds.— Upon a facility's j 
acceptance of written authorization of a resident under I 
subparagraph (A)(ii), the facility must manage and account 
for the personal funds of the resident deposited with the 
facility as follows: j 

"(i) Deposit. — The facility must deposit any amount i 
of personal funds in excess of $50 with respect to a ! 
resident in an interest bearing account (or accounts) j 
that is separate from any of the facility's operating 
accounts and credits all interest earned on such sepa- i 
rate account to such account. With respect to any other 
personal funds, the facility must maintain such funds I 
in a non-interest bearing account or petty cash fund. 

"(ii) Accounting and records. — The facility must 
assure a full and complete separate accounting of each ' 
such resident's personal funds, maintain a written 
record of all financial transactions involving the per- 
; r sonal funds of a resident deposited with the facility, 
and afford the resident (or a legal representative of the 
resident) reasonable access to such record. 

**(iii) Notice of certain balances. — The facility 
must notify each resident receiving medical assistance 
under the State plan under title XIX when the amount 
in the resident's account reaches $200 less than the ; 
dollar amount determined under section 1611(a)(3XB) 
and the fact that if the amount in the account (in 
addition to the value of the resident's other nonexempt 
resources) reaches the amount determined under such 
section the resident may lose eligibility for such medi- 
cal assistance or for benefits under title XVI. 

"(iv) Conveyance upon death. — Upon the death of a 
resident with such an account, the facility must convey 
promptly the resident's personal funds (and a final 
accounting of such funds) to the individual administer- ' 
ing the resident's estate. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-195 



"(C) Assurance of financial security.— The facility 
must purchase a surety bond, or otherwise provide assur- 
ance satisfactory to the Secretary, to assure the security of 
all personal funds of residents deposited with the facility. 

"(D) Limitation on charges to personal funds.— The 
facility may not impose a charge against the personal funds 
of a resident for any item or service for which payment is 
made under this title or title XVIIL 
"(d) Requirements Relating to Administration and Other 
Matters. — 

"(1) Administration. — 

"(A) In general. — A nursing facility must be adminis- 
tered in a manner that enables it to use its resources 
effectively and efficiently to attain or maintain the highest 
practicable physical, mental, and psychosocial well-being of 
each resident (consistent with requirements established 
under subsection (fK5)). 
"(B) Required notices.— If a change occurs in— 

"(i) the persons with an ownership or control interest 
(as defined in section 1124(aX3)) in the facility, 

"(ii) the persons who are officers, directors, agents, or 
managing employees (as defined in section 1126(b)) of 
the facility, 

"(iii) the corporation, association, or other company 
responsible for the management of the facility, or 

"(iv) the individual who is the administrator or direc- 
tor of nursing of the facility, 
the nursing facility must provide notice to the State agency 
responsible for the licensing of the facility, at the time of 
the change, of the change and of the identity of each new 
person, company, or individual described in the respective 
clause. 

"(C) Nursing facility administrator.— The adminis- 
trator of a nursing facility must meet standards established 
by the Secretary under subsection (fX4). 
"(2) Licensing and ufe safety code.— 

"(A) Licensing. — A nursing facility must be licensed 
under applicable State and local law. 

"(B) Life safety code.— A nursing facility must meet 
such provisions of such edition (as specified by the Sec- 
retary in regulation) of the Life Safety Code of the National 
Fire Protection Association as are applicable to nursing 
homes; except that — 

"(i) the Secretary may waive, for such periods as he 
deems appropriate, specific provisions of such Code 
which if rigidly applied would result in unreasonable 
hardship upon a facility, but only if such waiver would 
not adversely affect the health and safety of residents 
or personnel, and 

"(ii) the provisions of such Code shall not apply in 
any State if the Secretary finds that in such State there 
is in effect a fire and safety code, imposed by State law, 
which adequately protects residents of and personnel in 
nursing facilities. 
"(3) Sanitary and infection control and physical environ- 
ment.— A nursing facility must— 



101 STAT. 1330-196 PUBLIC LAW 100-203— DEC. 22, 1987 



"(A) establish and maintain an infection control program 

designed to provide a safe, sanitary, and comfortable i 

environment in which residents reside and to help prevent j 

the development and transmission of disease and infection, i 

and ' 

"(B) be designed, constructed, equipped, and maintained ! 

- in a manner to protect the health and safety of residents, j 
personnel, and the general public. 

"(4) Miscellaneous. — i tra 

''(A) COMPUANCE WITH FEDERAL, STATE, AND LOCAL LAWS I l9i 

AND PROFESSIONAL STANDARDS. — A nursing facility must I est 
operate and provide services in compliance with all ap- I fei 
plicable Federal, State, and local laws and regulations ; rel 
(including the requirements of section 1124 and with I no 
accepted professional standards and principles which apply 
to professionals providing services in such a facility. lal 
"(B) Other.— A nursing facility must meet such other j en 
requirements relating to the health and safety of residents ur 
or relating to the physical facilities thereof as the Secretary tri 
may find necessary.", 
(c) State Requirements Relating to Nursing Faciuty Require- El 
42 use I396r. MENTS. — Section 1919 of such Act is further amended by adding at be 
the end the following new subsection: re 

"(e) State Requirements Relating to Nursing Faciuty 
Requirements. — As a condition of approval of ®^ its plan under this 
title, a State must provide for the following: 

"(1) Specification and review of nurse aide training and 1 
competency evaluation programs and of nurse aide com- 
petency evaluation programs.— The State must— 

"(A) by not later than September 1, 1988, specify those 
training and competency evaluation programs, and those 
competency evaluation programs, that the State approves a 
for purposes of subsection (b)(5) and that meet the require- d 
ments established under clause (i) or (ii) of subsection | a 
(f)(2)(A), and si 

"(B) by not later than September 1, 1990, provide for the 
review and reapproval of such programs, at a frequency and g 
using a methodology consistent with the requirements 
established under subsection (fK2)(AXiii). 
The failure of the Secretary to establish requirements under 
subsection (fK2) shall not relieve any State of its responsibility 
under this paragraph. 
"(2) Nurse aide registry.— 

"(A) In general. — By not later than January 1, 1989, the 
State shall establish and maintain a registry of all individ- 
uals who have satisfactorily completed a nurse aide train- 
ing and competency evaluation program, or a nurse aide 
competency evaluation program, approved under para- 
graph (1) in the State. 

"(B) Information in registry. — The registry under 
subparagraph (A) shall provide (in accordance with regula- 
tions of the Secretary) for the inclusion of specific docu- 
mented findings by a State under subsection (gXl)(C) of 
resident neglect or abuse or misappropriation of resident 



65 Copy read "approval its". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-197 



property involving an individual listed in the registry, as 
well as any brief statement of the individual disputing the 
findings. In the case of inquiries to the registry concerning 
an individual listed in the registry, any information dis- 
closed concerning such a finding shall also include disclo- 
sure of any such statement in the registry relating to the 
fmding or a clear and accurate summary of such a 
statement. 

"(3) State appeals process for transfers. — The State, for 
transfers from nursing facilities effected on or after October 1, 
1989, must provide for a fair mechanism, meeting the guidelines 
established under subsection (fK3), for hearing appeals on trans- 
fers of residents of such facilities; but the failure of the Sec- 
retary to establish such guidelines under such subsection shall 
not relieve any State of its responsibility under this paragraph. 

"(4) Nursing faciuty administrator standards.— By not 
later than July 1, 1989, the State must have implemented and 
enforced the nursing facility administrator standards developed 
under subsection (fX4) respecting the qualification of adminis- 
trators of nursing facilities. 

"(5) Specification of resident assessment instrument.— 
Effective July 1, 1990, the State shall specify the instrument to 
be used by nursing facilities in the State in complying with the 
requirement of subsection 0DX3XAXiii). Such instrument shall 
be— 

"(A) one of the instruments designated under subsection 
(fX6XB), or 

"(B) an instrument which the Secretary has approved as 
being consistent with the minimum data set of core ele- 
ments, common definitions, and utilization guidelines speci- 
fied by the Secretary under subsection (fK6XA). 
"(6) Notice of medicaid rights. — Each State, as a condition of 
approval of its plan under this title, effective April 1, 1988, must 
develop (and periodically update) a written notice of the rights 
and obligations of residents of nursing facilities (and spouses of 
such residents) under this title. 

"(7) State requirements for preadmission screening and 
resident review.— 

"(A) Preadmission screening. — Effective January 1, 
1989, the State must have in effect a preadmission screen- 
ing program, for making determinations (using any criteria 
developed under subsection (fK8)) described in subsection 
0t)X3XF) for mentally ill and mentally retarded individuals 
(as defined in subparagraph (G)) who are admitted to nurs- 
ing facilities on or after January 1, 1989. The failure of the 
Secretary to develop minimum criteria under subsection 
(fX8) shall not relieve any State of its responsibility to have 
a preadmission screening program under this subparagraph 
or to perform resident reviews under subparagraph (B). 
"(B) State requirement for annual resident review. — 
"(i) For mentally ill residents.— As of April 1, 
1990, in the case of each resident of a nursing facility 
who is mentally ill, the State mental health authority 
must review and determine (using any criteria devel- 
oped under subsection (fX8) and based on an independ- 
ent physical and mental evaluation performed by a 



101 STAT. 1330-198 



PUBLIC LAW 100-203— DEC. 22. 1987 



person or entity other than the State mental health 
authority'! — 

"(i' whether or not the resident, because of the 
resident's physical and mental condition, requires 
the level of services pro\ided by a nursing facility 
or requires the level of ser\ices of an inpatient 
psychiatric hospital for indi\'iduals under age 21 
•as described in section l^OS'hi^ or of an institution 
for mental dise.ases pro%iding medical assistance to 
indi%iduals 65 years of age or older; and 

whether or not the resident requires active 
treatment for mental illness, 
"(ii^ For mentally retarded residents— As of April 
1, 1990. in the case of each resident of a nursing facility 
who is mentally retarded, the State mental retardation 
or developmental disability authority must re\iew and 
determine 'using any criteria developed under sub- 
section ( f> 8 1 1 — 

"(T whether or not the resident, because of the 
resident's physical and mental condition, requires 
the level of ser.ic-es pro\ided by a nursing facility 
or requires the level of ser%ices of an intermediate 
care facility described under section 190.>d': and 
"iIT) whether or not the resident requires active 
treatment for mental retardation. 

"liii) F-REQL-ENCi' OF RE\TEWS.— 

"il' AvxuAL.— Except as pro\ided in subclauses 
(ID and tUTs the re\iews and determinations under 
clauses (ij and tii) must be conducted with respect 
to each mentally ill or mentally retarded resident 
not less often than annually. 

"ill' Preadmission review cases.— In the case of 
a resident subject to a preadmission review under 
subsection 'b»3'<F), the re%iew and determination 
under clause i' or <iii need not be done until the 
resident has resided in the nursirig facility* for 1 
year. 

"iIII' Inttlal rfvtew.— The reviews and deter- 
minations under clauses li^ and 'ii' must first be 
conducted 'for each resident not subject to 
preadmission review under subsection 'b»3«F by 
not later than April 1, 1990. 
"(C) Response to preadmission screentng asd resident 
REVIEW.— As of April 1, 1990, the State must meet the 
following requirements: 

*''(i' Long-term residents not reqltring nttlsing 

facility services. BtT REQLTRING ACTTVE TREATMENT,— 

In the case of a resident who is determined, under 
subparagraph 'B . not to require the level of services 
provided by a nursing facility-, but to require active 
treatment for mental illness or mental retardation, and 
who has continuously resided in a nursing facility for 
at least 30 months before the date of the determi nation, 
the State must, in consultation with the resident's 
family or le^al representative and care-givers — 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-199 



"(I) inform the resident of the institutional and 
noninstitutional alternatives covered under the 
State plan for the resident, 

"(II) offer the resident the choice of remaining in 
the facility or of receiving covered services in an 
alternative appropriate institutional or noninstitu- 
tional setting, 

"(III) clarify the effect on eligibility for services 
under the State plan if the resident chooses to 
leave the facility (including its effect on readmis- 
sion to the facility), and 

"(IV) regardless of the resident's choice, provide 
for (or arrange for the provision of) such active 
treatment for the mental illness or mental retarda- 
tion. 

A State shall not be denied payment under this title for 
nursing facility services for a resident described in this 
clause because the resident does not require the level of 
services provided by such a facility, if the resident 
chooses to remain in such a facility. 

"(ii) Other residents not requiring nursing facil- 
ity SERVICES, BUT REQUIRING ACTIVE TREATMENT.— In 

the case of a resident who is determined, under 
subparagraph (B), not to require the level of services 
provided by a nursing facility, but to require active 
treatment for mental illness or mental retardation, and 
who has not continuously resided in a nursing facility 
for at least 30 months before the date of the determina- 
tion, the State must, in consultation with the resident's 
family or legal representative and care-givers — 

"(I) arrange for the safe and orderly discharge of 
the resident from the facility, consistent with the 
requirements of subsection (c)(2), 

"(II) prepare and orient the resident for such 
discharge, and 

"(III) provide for (or arrange for the provision of) 
such active treatment for the mental illness or 
mental retardation, 
"(iii) Residents not requiring nursing faciuty 

SERVICES AND NOT REQUIRING ACTIVE TREATMENT. — In 

the case of a resident who is determined, under 
subparagraph (B), not to require the level of services 
provided by a nursing facility and not to require active 
treatment for mental illness or mental retardation, the 
State must — 

"(I) arrange for the safe and orderly discharge of 
the resident from the facility, consistent with the 
requirements of subsection (cX2), and 

"(II) prepare and orient the resident for such 
discharge. 

"(D) Denial of payment where failure to conduct 
PREADMISSION SCREENING.— No payment may be made 
under section 1903(a) with respect to nursing facility serv- 
ices furnished to an individual for whom a determination is 
required under subsection (bX3XF) or subparagraph (B) but 
for whom the determination is not made. 



101 STAT. 1330-200 PUBLIC LAW 100-203— DEC. 22, 1987 



Contracts. "(E) PERMITTING ALTERNATIVE DISPOSITION PLANS. — With 

respect to residents of a nursing facility who are mentally 
retarded or mentally ill and who are determined under 
subparagraph (B) not to require the level of services of such 
a facility, but who require active treatment for mental 
illness or mental retardation, a State and the nursing 
facility shall be considered to be in compliance with the 
requirement of this paragraph if, before October 1, 1988, 
the State and the Secretary have entered into an agree- 
ment relating to the disposition of such residents of the 
facility and the State is in compliance with such agreement. 
Such an agreement may provide for the disposition of the 
residents after the date specified in subparagraph (C). 

"(F) Appeals procedures.— Each State, as a condition of 
approval of its plan under this title, effective January 1, 
1989, must have in effect an appeals process for individuals 
adversely affected by determinations under subparagraph 
(A) or (B). 

"(G) Definitions.— In this paragraph and in subsection 
(bK3)(F): 

"(i) An individual is considered to be 'mentally ill' if 
the individual has a primary or secondary diagnosis of 
mental disorder (as defined in the Diagnostic and 
Statistical Manual of Mental Disorders, 3rd edition) 
and does not have a primary diagnosis of dementia 
/ (including Alzheimer's disease or a related disorder). 

"(ii) An individual is considered to be 'mentally re- 
tarded' if the individual is mentally retarded or a 
person with a related condition (as described in section 
1905(d)). 

"(iii) The term 'active treatment' has the meaning 
given such term by the Secretary in regulations, but 
does not include, in the case of a resident of a nursing 
facility, services within the scope of services which the 
facility must provide or arrange for its residents under 
subsection (b)(4). 

"(D Responsibiuties of Secretary Relating to Nursing Facil- 
ity Requirements.— 

"(1) General responsibility.— It is the duty and responsibil- 
ity of the Secretary to assure that requirements which govern 
the provision of care in nursing facilities under State plans 
approved under this title, and the enforcement of such require- 
ments, are adequate to protect the health, safety, welfare, and 
rights of residents and to promote the effective and efficient use 
of public moneys. 

"(2) Requirements for nurse aide training and com- 
petency evaluation programs and for nurse aide com- 
petency evaluation programs.— 

"(A) In general. — For purposes of subsections (b)(5) and 
(e)(1)(A), the Secretary shall establish, by not later than 
July 1, 1988— 

"(i) requirements for the approval of nurse aide 
♦ training and competency evaluation programs, includ- 

ing requirements relating to (I) the areas to be covered 
in such a program (including at least basic nursing 
skills, personal care skills, cognitive, behavioral and 
social care, basic restorative services, and residents' 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-201 



rights), content of the curriculum, (II) minimum hours 
of initial and ongoing training and retraining (includ- 
ing not less than 75 hours in the case of initial train- 
ing), (III) qualifications of instructors, and (IV) 
procedures for determination of competency; 

"(ii) requirements for the approval of nurse aide 
competency evaluation programs, including require- 
ment relating to the areas to be covered in such a 
program, including at least basic nursing skills, per- 
sonal care skills, cognitive, behavioral and social care, 
basic restorative services, and residents' rights, and 
procedures for determination of competency; 

"(iii) requirements respecting the minimum fre- 
quency and methodology to be used by a State in 
reviewing such programs' compliance with the require- 
ments for such programs. 
"(B) Approval of certain programs. — Such require- 
ments — 

"(i) may permit approval of programs offered by or in 
facilities, as well as outside facilities (including em- 
ployee organizations), and of programs in effect on the 
date of the enactment of this section; 

"(ii) shall permit a State to find that an individual 
who has completed (before January 1, 1989) a nurse 
aide training and competency evaluation program shall 
be deemed to have completed such a program approved 
under subsection (b)(5) if the State determines that, at 
the time the program was offered, the program met the 
requirements for approval under such paragraph; and 
"(iii) shall prohibit approval of such a program — 
"(I) offered by or in a nursing facility which has 
been determined to be out of compliance with the 
requirements of subsection (b), (c), or (d), within the 
previous 2 years, or 

"(II) offered by or in a nursing facility 
unless the State makes the determination, upon an 
individual's completion of the program, that the 
individual is competent to provide nursing and 
nursing-related services in nursing facilities. 
A State may not delegate its responsibility under 
clause (iii)(II) to the nursing facility. 
"(3) Federal guidelines for state appeals process for 
transfers.— For purposes of subsections (c)(2)(BXiii) and (e)(3), 
by not later than October 1, 1988, the Secretary shall establish 
guidelines for minimum standards which State appeals proc- 
esses under subsection (eX3) must meet to provide a fair mecha- 
nism for hearing appeals on transfers of residents from nursing 
facilities. 

"(4) Secretarial standards qualification of administra- 
tors. — For purposes of subsections (dXlXC) and (eX4), the Sec- 
retary shall develop, by not later than March 1, 1988, standards 
to be applied in assuring the qualifications of administrators of 
nursing facilities. 

**(5) Criteria for administration.— The Secretary shall 
establish criteria for assessing a nursing facility's compliance 
with the requirement of subsection (dXl) with respect to — 
"(A) its governing body and management, 



101 STAT. 1330-202 PUBLIC LAW 100-203— DEC. 22, 1987 

**(B) agreements with hospitals regarding transfers of 
residents to and from the hospitals and to and from other 
nursing facilities, 

"(C) disaster preparedness, 
**(D) direction of medical care by a physician, 
"(E) laboratory and radiological services, 
"(F) clinical records, and 
"(G) resident and advocate participation. 
"(6) Specification of resident assessment data set and 
INSTRUMENTS. — The Secretary shall— 

"(A) not later than January 1, 1989, specify a minimum 
data set of core elements and common definitions for use by 
nursing facilities in conducting the assessments required 
under subsection (bX3), and establish guidelines for utiliza- 
tion of the data set; and 

"(B) by not later than April 1, 1990, designate one or 
more instruments which are consistent with the specifica- 
tion made under subparagraph (A) and which a State may 
specify under subsection (eX5XA) for use by nursing facili- 
ties in complying with the requirements of subsection 
(bX3XAXiii). 

"(7) List of items and services furnished in nursing faciu- 
ties not chargeable to the personal funds of a resident. — 

"(A) Regulations required.— Pursuant to the require- 
ment of section 21(b) of the Medicare-Medicaid Anti-Fraud 
and Abuse Amendments of 1977, the Secretary shall issue 
regulations, on or before the first day of the seventh month 
to begin after the date of enactment of this section, that 
define those costs which may be charged to the personal 
funds of patients in nursing facilities who are individuals 
receiving medical assistance with respect to nursing facility 
services under this title and those costs which are to be 
included in the payment amount under this title for nurs- 
ing facility services. 

"(B) Rule if failure to pubush regulations.— If the 
Secretary does not issue the regulations under subpara- 
graph (A) on or before the date required in that subpara- 
graph, in the case of a resident of a nursing facility who is 
eligible to receive benefits for nursing facility services 
r under this title, for purposes of section 1902(aX28XB), the 

Secretary shall be deemed to have promulgated regulations 
under this paragraph which provide that the costs which 
may not be charged to the personal funds of such resident 
(and for which payment is considered to be made under this 
title) do not include, at a minimum, the costs for routine 
personal hygiene items and services furnished by the 
facility. 

"(8) Federal minimum criteria and monitoring for 
preadmission screening and resident review.— 

"(A) Minimum criteria. — The Secretary shall develop, by 
not later than October 1, 1988, minimum criteria for States 
to use in making determinations under subsections (bX3XF) 
and (eX7XB) and in permitting individuals adversely af- 
fected to appeal such determinations, and shall notify the 
States of such criteria. 

"(B) Monitoring compuance. — The Secretary shall 
review, in a sufficient number of cases to allow reasonable 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-203 



inferences, each State's compliance with the requirements 
of subsection (eX7){C)(ii) (relating to discharge and place- 
ment for active treatment of certain residents). 
"(9) Criteria for monitoring state waivers.— The Sec- 
retary shall develop, by not later than October 1, 1988, criteria 
and procedures for monitoring State performances in granting 
waivers pursuant to subsection (b)(4)(C)(ii).". 
(b) Incorporating Requirements into State Plan.— 

(1) In general.— Section 1902(a) of such Act (42 U.S.C. 
1396a(a)) is amended — 

(A) in paragraph (13)(A), by inserting "which, in the case 
of nursing facilities, take into account the costs of comply- 
ing with subsections (b) (other than paragraph (3)(F) 
thereof), (c), and (d) of section 1919 and provide (in the case 
of a nursing facility with a waiver under section 
1919(b)(4)(C)(ii)) for an appropriate reduction to take into 
account the lower costs (if any) of the facility for nursing 
care," after "State" the second place it appears; and 

(B) by amending paragraph (28) to read as follows: 
"(28) provide— 

"(A) that any nursing facility receiving payments under 
such plan must satisfy all the requirements of subsections 
(b) through (d) of section 1919 as they apply to such 
facilities; 

"(B) for including in 'nursing facility services' at least the 
items and services specified (or deemed to be specified) by 
the Secretary under section 1919(fX7) and making available 
upon request a description of the items and services so 
included; 

"(C) for procedures to make available to the public the 
data and methodology used in establishing payment rates 
for nursing facilities under this title; and 

"(D) for compliance (by the date specified in the respec- 
tive sections) with the requirements of — 

"(i) section 1919(f) (relating to implementation of 
nursing facility requirements, including paragraph 
(6)(B), relating to specification of resident assessment 
instrument); 

"(ii) section 1919(g) (relating to responsibility for 
survey and certification of nursing facilities); and 

"(iii) sections 1919(h)(2)(B) and 1919(hX2)(D) (relating 
to establishment and application of remedies);". 

(2) State plan amendment required. — A plan of a State 42 use I396a 
under title XIX of the Social Security Act shall not be consid- note. 

ered to have met the requirement of section 1902(a)(13)(A) of the 
Social Security Act (as amended by paragraph (IX A) of this 
subsection), as of the first day of a Federal fiscal year (beginning 
on or after October 1, 1990), unless the State has submitted to 
the Secretary of Health and Human Services, as of April 1 
before the fiscal year, an amendment to such State plan to 
provide for an appropriate adjustment in payment amounts for 
nursing facility services furnished during the Federal fiscal 
year. The Secretary shall, not later than September 30 before 
the fiscal year concerned, review each such plan amendment for 



66 Copy read " "(8)". 



101 STAT. 1330-204 PUBLIC LAW 100-203— DEC. 22, 1987 

compliance with such requirement and by such date shall ap- 
prove or disapprove each such amendment. If the Secretary 
disapproves such an amendment, the State shall immediately 
submit a revised amendment which meets such requirement. 
The absence of approval of such a plan amendment does not 
relieve the State or any nursing facility of any obligation or 
requirement under title XIX of the Social Security Act (as 
amended by this Act). 
Reports. (c) EVALUATION.— The Secretary of Health and Human Services 

42 use I396r shall evaluate, and report to Congress by not later than January 1, 

1993, on the implementation of the resident assessment process for ! 
residents of nursing facilities under the amendments made by this 
section. I 

(d) Funding.— 

(1) In general.— Section 1903(a)(2) of such Act (42 U.S.C. 
1396b(a)(2)) is amended— 

(A) by inserting "(A)" after "(2)", and 

(B) by adding at the end the following new subpara- 
graphs: 

"(B) notwithstanding paragraph (1) or subparagraph (A), with 
respect to amounts expended for nursing aide training and 
competency evaluation programs, and competency evaluation 
programs, described in section 1919(e)(1), regardless of whether 
the programs are provided in or outside nursing facilities or of 
the skill of the personnel involved in such programs, an amount 
equal to 50 percent of so much of the sums expended during 
such quarter (as found necessary by the Secretary for the proper 
' and efficient administration of the State plan) as are attrib- 
utable to such programs; plus 

"(C) an amount equal to 75 percent of so much of the sums 
expended during such quarter (as found necessary by the Sec- 
retary for the proper and efficient administration of the State 
plan) as are attributable to preadmission screening and resident 
review activities conducted by the State under section 1919(e)(7); 
plus". 

42 use 1396b (2) ENHANCED FUNDING FOR NURSE AIDE TRAINING. — For Ca\- 

iiote. endar quarters during fiscal years 1988 and 1989, with respect 

to payment under section 1903(a)(2)(B) of the Social Security Act 
to a State for additional amounts expended by the State under 
its plan approved under title XIX of such Act for nursing aide 
training and competency evaluation programs, and competency 
evaluation programs, described in section 1919(e)(1) of such title, 
any reference to "50 percent" is deemed a reference to the sum 
of the Federal medical assistance percentage (determined under 
section 1905(b) of such Act) plus 25 percentage points, but not to ^ 
exceed 90 percent. 

(e) Revision of Previous Definitions.— Section 1905 of such Act 
(42 U.S.C. 1396d) is amended— 

(1) by amending subsection (c) to read as follows: 

"(c) For definition of the term 'nursing facility', see section 
1919(a)."; 

(2) in subsection (d) — 

* (A) by striking "intermediate care facility services" and 

inserting "intermediate care facility for the mentally re- 
tarded", 

(B) by striking "may include services in a public" and 
inserting "means an", 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-205 

(C) in paragraph (3), by inserting "in the case of a public 
institution," after "(3)"; 

(3) in subsection (f), by striking "skilled" each place it 
appears; and 

(4) by striking subsection (i). 

(f) Making Coverage of Nursing Facility Services Mandatory 
FOR Adults.— Section 1905(a)(4XA) of such Act (42 U.S.C. 
1396d(aX4XA)) is amended by striking "skilled". 

(g) Elimination of Payment Differential. — Section 1903 of such 
Act (42 U.S.C. 1396b) is amended— 

(1) by striking subsection (h), and 

(2) in subsection (aXD, by striking (h), and" and inserting 
"and". 

(h) Clarifying Terminology.— (1) Section 1902(aX10) of such Act 
(42 U.S.C. 1396a(aX10)) is amended— 

(A) in subparagraph (AXiiXVI), by striking "skilled" and by 
inserting "for the mentally retarded" after "intermediate care 
facility"; 

(B) in subparagraph (CXiv), by striking "intermediate care 
facility services" and inserting "in an intermediate care facil- 
ity"; and 

(C) in subparagraph (D), by striking "skilled". 

(2) Section 1902(aX13) of such Act (42 U.S.C. 1396a(aX13)) is 
amended — 

(A) in subparagraph (A), by striking ", skilled nursing facility, 
and intermediate care facility services" and inserting "services, 
nursing facility services, and services in an intermediate care 
facility for the mentally retarded"; 

(B) in subparagraph (A), by striking ", skilled nursing facility, 
and intermediate care facility and" and inserting "nursing 
facility, and intermediate care facility for the mentally retarded 
and"; 

(C) in subparagraph (C), by striking "skilled nursing facilities 
and intermediate care facilities" and inserting "nursing facili- 
ties"; and 

(D) in subparagraph (D) — 

(i) by striking "skilled nursing facility or intermediate 
care facility" and inserting "nursing facility", and 

(ii) by striking "skilled nursing facility services or inter- 
mediate care facility services" and inserting "nursing facil- 
ity services". 

(3) Section 1902(aX"30XB) of such Act (42 U.S.C. 1396a(aX30XB)) is 
amended by striking "skilled nursing facility, intermediate care 
facility," each place it appears and inserting "intermediate care 
facility for the mentally retarded,". 

(4) Section 1902(eX3XBXi) of such Act (42 U.S.C. 1396a(eX3XBXi)) is 
amended by striking "skilled nursing facility, or intermediate care 
facility" and inserting "nursing facility, or intermediate care facil- 
ity for the mentally retarded". 

(5) Section 1902(eX9) of such Act (42 U.S.C. 1396a(eX9)) is 
amended — 

(A) in subparagraph (AXiii), by striking "skilled nursing facil- 
ity, or intermediate care facility," and inserting "nursing facil 
ity, or intermediate care facility for the mentally retarded" and 



«^ Copy read "retarded",". 



101 STAT. 1330-206 PUBLIC LAW 100-203— DEC. 22, 1987 



(B) in subparagraph (B), by striking "skilled nursing facilities, 
or intermediate care facilities" and inserting "nursing facilities, 
or intermediate care facilities for the mentally retarded". 

(6) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is amended— 

(A) in paragraph (5), by striking "skilled", 

(B) in paragraph (14), by striking ", skilled nursing facility 
services, and intermediate care facility services" and inserting 
"and nursing facility services", and 

(C) in paragraph (15), by striking "intermediate care facility 
services (other than such services" and inserting "services in an 
intermediate care facility for the mentally retarded (other 
than". 

(7) Section 1128B of such Act (42 U.S.C. 1320a-7b) is amended— 

(A) in subsection (c), by striking "intermediate care facility" 
and inserting "nursing facility, intermediate care facility for 
the mentally retarded", and 

(B) in subsection (d)(2)(A), by striking "skilled nursing facility, 
or intermediate care facility" and inserting "nursing facility, or 
intermediate care facility for the mentally retarded". 

(8) Section 1911 of such Act (42 U.S.C. 1396j) is amended by 
striking ", intermediate care facility, or skilled nursing facility ' 
each place it appears and inserting "or nursing facility". 

(9) Section 1913 of such Act (42 U.S.C. 13961) is amended— 

(A) in the heading, by striking "skilled nursing and inter- 
mediate CARE services" and inserting "nursing facility serv- 
ices"; 

(B) in subsection (a) — 

(i) by striking "skilled nursing facility services and inter- 
mediate care facility services" and inserting "nursing facil- 
ity services", and 

(ii) by inserting before the period at the end the following: 
"and which, with respect to the provision of such services, 
meets the requirements of subsections (b) through (d) of 
section 1919"; 

(C) in subsection (b)(1) — 

(i) by striking "skilled nursing or intermediate care facil- 
ity services" and inserting "nursing facility services", and 

(ii) by striking "skilled nursing and intermediate care 
facilities" and inserting "nursing facilities"; and 

(D) in subsection (b)(3), by striking "skilled nursing or inter- 
mediate care facility services" and inserting "nursing facility 
services" 

(10) Section 1915(c) of such Act (42 U.S.C. 1396n(c)) is amended— 

(A) in paragraph (1), by striking "skilled nursing facility or 
intermediate care facility" and inserting "nursing facility or 
intermediate care facility for the mentally retarded"; 

(B) in paragraph (2)(B)(i), by striking ", skilled nursing facil- 
ity, or intermediate care facility services" and inserting "serv- 
ices, nursing facility services, or services in an intermediate 
care facility for the mentally retarded"; 

(C) in paragraph (2)(B), by striking "need" and all that follows 
up to the semicolon and inserting "need for inpatient hospital 
services, nursing facility services, or services in an intermediate 
care facility for the mentally retarded"; 

(D) in paragraph (2)(C), by striking "or skilled nursing facility 
or intermediate care facility" and inserting ", nursing facility, 
or intermediate care facility for the mentally retarded"; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-207 



(E) in paragraph (2XC), by striking "or skilled nursing facility 
or intermediate care facility services" and inserting nursing 
facility services, or services in an intermediate care facility for 
the mentally retarded"; 

(F) in paragraph (5), by striking "skilled nursing facility or 
intermediate care facility" and inserting "nursing facility or 
intermediate care facility for the mentally retarded"; and 

(G) in paragraph (7), by striking "or in skilled nursing or 
intermediate care facilities" and inserting ", nursing facilities, 
or intermediate care facilities for the mentally retarded". 

(11) Section 1916 of such Act (42 U.S.C. 1396m) is amended, in 42 USC l396o. 
subsections (aX2XC) and (bX2XC), by striking "skilled nursing facil- 
ity, intermediate care facility" and inserting "nursing facility, inter- 
mediate care facility for the mentally retarded". 

(12) Section 1917 of such Act (42 U.S.C. 1396p), as amended by this 
title, is further amended — 

(A) in subsections (aXlXBXi) and (cX2)(BXi), by striking 
"skilled nursing facility, intermediate care facility" and insert- 
ing "nursing facility, intermediate care facility for the mentally 
retarded", and 

(B) in subsection (cX3XA), by striking "skilled". 

(i) Utiuzation Review.— Section 1903(iX4) of such Act (42 U.S.C. 
1396b(iX4)) is amended by striking "or skilled nursing facility" each 
place it appears. 

(j) Technical Assistance.— The Secretary of Health and Human 42 use I396a 
Services shall, upon request by a State, furnish technical assistance 
with respect to the development and implementation of reimburse- 
ment methods for nursing facilities that take into account the case 
mix of residents in the different facilities. 

(k) Report on Staffing Requirements.— The Secretary of Health 42 use I396r 
and Human Services shall report to Congress, by not later than note. 
January 1, 1993, on the progress made in implementing the nursing 
facility staffing requirements of subparagraph (C) of section 
1919(bX4) of the Social Security Act (as amended by subsection (a) of 
this section), including the number and types of waivers approved 
under subparagraph (CXii) of such section and the number of facili- 
ties which have received waivers. 

(1) Conforming Amendment.— Section 9516(c) of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 is amended by striking 42 USC i396r-3 
"section 1919" and inserting "section 1922". note. 

SEC. 4212. SURVEY AND CERTIFICATION PROCESS. 

(a) In General. — Section 1919 of the Social Security Act, as 
inserted by section 4211, is amended by adding at the end the 
following new subsection: 
"(g) Survey and Certification Process. — 
"(1) State and federal responsibiuty.— 

"(A) In general. — Under each State plan under this title, 
the State shall be responsible for certifying, in accordance 
with surveys conducted under paragraph (2), the compli- 
ance of nursing facilities (other than facilities of the State) 
with the requirements of subsections (b), (c), and (d). The 
Secretary shall be responsible for certifying, in accordance 
with surveys conducted under paragraph (2), the compli- 
ance of State nursing facilities with the requirements of 
such subsections. 



101 STAT. 1330-208 PUBLIC LAW 100-203— DEC. 22, 1987 

I 

**(B) Educational program.— Each State shall conduct 
periodic educational programs for the staff and resident© \ 
(and their representatives) of nursing facilities in order to 
present current regulations, procedures, and policies under 
this section. | 

"(C) Investigation of allegations of resident neglect 

AND abuse and MISAPPROPRIATION OF RESIDENT PROPERTY.— 

The State shall provide, through the agency responsible for j 
surveys and certification of nursing facilities under this 
subsection, for a process for the receipt, review, and inves* J 
tigation of allegations of neglect and abuse and misappro- i j 
priation of resident property by a nurse aide of a resident in ' 
a nursing facility. If the State finds, after notice to the 
nurse aide involved and a reasonable opportunity for a 
0 hearing for the nurse aide to rebut allegations, that a nurse i 
aide whose name is contained in a nurse aide registry has 
neglected or abused a resident or misappropriated resident 
property in a facility, the State shall notify the nurse aide 
and the registry of such finding. 

"(D) Construction. — The failure of the Secretary to j 
establish standards under subsection (0 shall not relieve a ! 
State of its responsibility under this subsection. [ 
"(2) Surveys.— t 
' *( A) Annual standard survey.— 

"(i) In general. — Each nursing facility shall be sub- 
ject to a®® standard survey, to be conducted without i 
any prior notice to the facility. Any individual who , 
notifies (or causes to be notified) a nursing facility of 
the time or date on which such a survey is scheduled to 
be conducted is subject to a civil money penalty of not 
to exceed $2,000. The Secretary shall provide for im- | 
position of civil money penalties under this clause in a 
manner similar to that for the imposition of civil 
money penalties under section 1128A. The Secretary 
shall review each State's procedures for scheduling and [ 
conduct of standard surveys to assure that the State 
has taken all reasonable steps to avoid giving notice of 
such a survey through the scheduling procedures and 
the conduct of the surveys themselves. 

"(ii) Contents. — Each standard survey shall include, 
for a case-mix stratified sample of residents — 

"(I) a survey of the quality of care furnished, as 
measured by indicators of medical, nursing, and 
rehabilitative care, dietary and nutrition services, 
activities and social participation, and sanitation, 
infection control, and the physical environment, 
"(II) written plans of care provided under subsec- 
tion (b)(2) and an audit of the residents* assess- 
ments under subsection (b)(3) to determine the ac- 
curacy of such assessments and the adequacy of 
such plans of care, and 

"(III) a review of compliance with residents* i 
rights under subsection (c). 
"(iii) Frequency. — 



Copy read "to an standard". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-209 



"(I) In general. — Each nursing facility shall be 
subject to a standard survey not later than 15 
months after the date of the previous standard 
survey conducted under this subparagraph. The 
statewide ®^ average interval between standard 
surveys of a nursing facility shall not exceed 12 
months. 

"(II) Special surveys.— If not otherwise con- 
ducted under subclause (I), a standard survey (or 
an abbreviated standard survey) may be conducted 
within 2 months of any change of ownership, 
administration, management of a nursing facility, 
or director of nursing in order to determine 
whether the change has resulted in any decline in 
the quality of care furnished in the facility. 
"(B) Extended surveys. — 

"(i) In general.— Each nursing facility which is 
found, under a standard survey, to have provided sub- 
standard quality of care shall be subject to an extended 
survey. Any other facility may, at the Secretary's or 
State's discretion, be subject to such an extended 
survey (or a partial extended survey). 

"(ii) Timing.— The extended survey shall be con- 
ducted immediately after tl:e standard survey (or, if not 
practical, not later than 2 weeks after the date of 
completion of the standard survey). 

"(iii) Contents. — In such an extended survey, the 
survey team shall review and identify the policies and 
procedures which produced such substandard quality of 
care and shall determine whether the facility has com- 
plied with all the requirements described in subsections 
(b), (c), and (d). Such review shall include an expansion 
of the size of the sample of residents' assessments 
reviewed and a review of the staffing, of in-service 
training, and, if appropriate, of contracts with consult- 
ants. 

**(iv) Construction.— Nothing in this paragraph 
shall be construed as requiring an extended or partial 
extended survey as a prerequisite to imposing a sanc- 
tion against a facility under subsection (h) on the basis 
of findings in a standard survey. 
"(C) Survey protocol. — Standard and extended surveys 
shall be conducted — 

"(i) based upon a protocol which the Secretary has 
developed, tested, and validated by not later than Janu- 
ary 1, 1990, and 

"(ii) by individuals, of a survey team, who meet such 
minimum qualifications as the Secretary establishes by 
not later than such date. 
The failure of the Secretary to develop, test, or validate 
such protocols or to establish such minimum qualifications 
shall not relieve any State of its responsibility (or the 
Secretary of the Secretary's responsibility) to conduct sur- 
veys under this subsection. 



Copy read "Statewide". 



101 STAT. 1330-210 PUBLIC LAW 100-203— DEC. 22, 1987 



**(D) Consistency of surveys.— Each State shall imple- 
ment programs to measure and reduce inconsistency in the 
application of survey results among surveyors. 
"(E) Survey teams.— 

"(i) In general.— Surveys under this subsection shall 
be conducted by a multidisciplinary team of profes- 
sionals (including a registered professional nurse). 

"(ii) Prohibition of conflicts of interest. — A State 
may not use as a member of a survey team under this 
subsection an individual who is serving (or has served 
within the previous 2 years) as a member of the staff of, 
or as a consultant to, the facility surveyed respecting 
compliance with the requirements of subsections (b), (c), 
and (d), or who has a personal or familial financial 
interest in the facility being surveyed. 

"(iii) Training. — The Secretary shall provide for the 
comprehensive training of State and Federal surveyors 
in the conduct of standard and extended surveys under 
this subsection, including the auditing of resident 
assessments and plans of care. No individual shall 
serve as a member of a survey team unless the individ- 
ual has successfully completed a training and testing 
program in survey and certification techniques that 
has been approved by the Secretary. 
"(3) Validation surveys.— 

"(A) In general.— The Secretary shall conduct onsite 
surveys of a representative sample of nursing facilities in 
each State, within 2 months of the date of surveys con- 
ducted under paragraph (2) by the State, in a sufficient 
number to allow inferences about the adequacies of each 
State's surveys conducted under paragraph (2). In conduct- 
ing such surveys, the Secretary shall use the same survey 
protocols as the State is required to use under paragraph 
(2). If the State has determined that an individual nursing 
facility meets the requirements of subsections (b), (c), and 
(d), but the Secretary determines that the facility does not 
meet such requirements, the Secretary's determination as 
to the facility s noncompliance with such requirements is 
binding and supersedes that of the State survey. 

**(B) Scope. — With respect to each State, the Secretary 
shall conduct surveys under subparagraph (A) each year 
with respect to at least 5 percent of the number of nursing 
facilities surveyed by the State in the year, but in no case 
less than 5 nursing facilities in the State. 

*'(C) Reduction in administrative costs for sub- 
standard performance.— If the Secretary finds, on the 
basis of such surveys, that a State has failed to perform 
surveys as required under paragraph (2) or that a State's 
survey and certification performance otherwise is not ade- 
quate, the Secretary may provide for the training of survey 
teams in the State and shall provide for a reduction of the 
payment otherwise made to the State under section 
1903(aX2XD) with respect to a quarter equal to 33 percent 
multiplied by a fraction, the denominator of which is equal 
to the total number of residents in nursing facilities sur- 
veyed by the Secretary that quarter and the numerator of 
which is equal to the total number of residents in nursing 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-211 



facilities which were found pursuant to such surveys to be 
not in compliance with any of the requirements of subsec- 
tions (b), (c), and (d). A State that is dissatisfied with the 
Secretary's findings under this subparagraph may obtain 
reconsideration and review of the findings under section 
1116 in the same manner as a State may seek reconsider- 
ation and review under that section of the Secretary's 
determination under section 1116(aXl). 

"(C) Special surveys of compuance.— Where the Sec- 
retary has reason to question the compliance of a nursing 
facility with any of the requirements of subsections (b), (c), 
and fd), the Secretary may conduct a survey of the facility 
and, on that basis, make independent and binding deter- 
minations concerning the extent to which the nursing facil- 
ity meets such requirements. 
"(4) Investigation of complaints and monitoring nursing 
FACILITY COMPUANCE. — Each State shall maintain procedures 
and adequate staff to — 

"(A) investigate complaints of violations of requirements 
by nursing facilities, and 

"(B) monitor, on-site, on a regular, as needed basis, a 
nursing facility's compliance with the requirements of 
subsections (b), (c), and (d), if — 

"(i) the facility has been found not to be in compli- 
ance with such requirements and is in the process of 
correcting deficiencies to achieve such compliance; 

"(ii) the facility was previously found not to be in 
compliance with such requirements, has corrected defi- 
ciencies to achieve such compliance, and verification of 
continued compliance is indicated; or 

"(iii) the State has reason to question the compliance 
of the facility with such requirements. 
A State may maintain and utilize a specialized team (including 
an attorney, an auditor, and appropriate health care profes- 
sionals) for the purpose of identifying, surveying, gathering and 
preserving evidence, and carrying out appropriate enforcement 
actions against chronically substandard nursing facilities. 
"(5) Disclosure of results of inspections and activities.— 
"(A) PuBuc information.— Each State, and the Sec- 
retary, shall make available to the public — 

"(i) information respecting all surveys and certifi- 
cations made respecting nursing facilities, including 
statements of deficiencies and plans of correction, 

"(ii) copies of cost reports of such facilities filed under 
this title or under title XVIII, 

"(iii) copies of statements of ownership under section 
1124, and 

"(iv) information disclosed under section 1126. 
"(B) Notice to ombudsman.— Each State shall notify the 
State long-term care ombudsman (established under section 
307(aX12) of the Older Americans Act of 1965) of the State's 
findings of noncompliance with any of the requirements of 
subsections (b), (c), and (d), with respect to a nursing facility 
in the State. 

"(C) Notice to physicians and nursing facility 
administrator ucensing board. — If a State finds that a 



101 STAT. 1330-212 PUBLIC LAW 100-203— DEC. 22, 1987 

nursing facility has provided substandard quality of care, 
the State shall notify — 

"(i) the attending physician of each resident with 
respect to which such finding is made, and 

"(ii) any State board responsible for the licensing of 
the nursing facility administrator of the facility. 
"(D) Access to fraud control units.— Each State shall 
provide its State medicaid fraud and abuse control unit 
(established under section 1903(q)) with access to all 
information of the State agency responsible for surveys and 
certifications under this subsection. '. 

(b) Posting Survey Results.— Section 1864(a) of such Act (42 
U.S.C. 1395aa(a)) is amended by inserting, after "readily available 
form and place" in the fifth sentence, the following: ", and require 
(in the case of skilled nursing facilities) the posting in a place readily 
accessible to patients (and patients' representatives),". 

(c) Increasing Matching Percentage for Nursing Home 
Survey and Certification Activities. — (1) Section 1903(aX2) of 
such Act (42 U.S.C. 1396b(a)(2)), as amended by this title, is further 
amended by adding at the end the following new subparagraph: 

"(D) for each calendar quarter during — 

"(i) fiscal year 1991, an amount equal to 90 percent, 
"(ii) fiscal year 1992, an amount equal to 85 percent, 
"(iii) fiscal year 1993, an amount equal to 80 percent, and 
"(iv) fiscal year 1994 and thereafter, an amount equal to 
75 percent, 

of so much of the sums expended during such quarter (as found 
necessary by the Secretary for the proper and efficient adminis- 
tration of the State plan) as are attributable to State activities 
under section 1919(g); plus". 
(2) Section 1903(r) of such Act (42 U.S.C. 1396b(r)) is amended by 
striking "paragraphs (2)" each place it appears and inserting "para- 
graphs (2)(A)". 

42 use 1396b (3) For purposes of section 1903(a) of the Social Security Act, 

note. proper expenses incurred by a State for medical review by independ- 

ent professionals of the care provided to residents of nursing facili- 
ties who are entitled to medical assistance under title XIX of such 
Act shall be reimbursable as expenses necessary for the proper and 
efficient administration of the State plan under that title. 

(d) Revision of Penalty Provisions. — (1) Section 1903(g) of such 
Act (42 U.S.C. 1396b(g)) is amended— 

(A) in paragraph (1) — 

(i) by striking "or intermediate care facility services" the 
first place it appears and inserting "or services in an 
intermediate care facility for the mentally retarded", 

(ii) by striking ", skilled nursing facility services for 30 
days,", 

(iii) by striking ", skilled nursing facility services, or 
intermediate care facility services" and inserting "or serv- 

' ices in an intermediate care facility for the mentally 
retarded", 

(iv) by striking ", skilled nursing facilities, and intermedi- 
* ate care facilities" and inserting "and intermediate care 

facilities for the mentally retarded"; 

(B) in paragraph (4XB), by striking ", skilled nursing facilities, 
and intermediate care facilities" and inserting "and intermedi- 
ate care facilities for the mentally retarded"; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-213 

(C) in paragraph (6) — 

(i) by striking subparagraph (B), 

(ii) in subparagraph (C), by striking "intermediate care 
facility services" and inserting * 'services in an intermediate 
care facility for the mentally retarded", and \ 

(iii) by redesignating subparagraphs (C) and (D) as sub- 
paragraphs (B) and (C), respectively; and 

(D) by striking paragraph (7). 

(2) Section 1902(aX31) of such Act (42 U.S.C. 1396a(a)(31)) is 
amended — 

(A) in the matter before subparagraph (A), by striking ''skilled 
nursing facility services" and all that follows through "where" 
and inserting "services in an intermediate care facility for the 
mentally retarded (where", and 

(B) in subparagraph (B), by striking "skilled nursing or inter- 
mediate care facility" and inserting "intermediate care facility 
for the mentally retarded". 

(3) Section 1902(a)(33)(B) of such Act (42 U.S.C. 1396a(a)(33)(B)) is 
amended by inserting ", except as provided in section 1919(d)," after 
"(B) that". 

(4) The amendments made by this subsection shall not apply to a Effective date. 
State until such date (not earlier than October 1, 1990) as of which 42 use I396a 
the Secretary determines that — 

(A) the State hgis specified the resident assessment in- 
strument under section 1919(e)(5) of the Social Security Act, and 

(B) the State has begun conducting surveys under section 
1919(gX2)ofsuch Act. 

(e) Miscellaneous Conforming Amendments.— (1) Section 
1902(a)(44) of such Act (42 U.S.C. 1396a(a)(44)) is amended— 

(A) in the matter before subparagraph (A), by striking "skilled 
nursing facility services, intermediate care facility services" 
and inserting "services in an intermediate care facility for the 
mentally retarded", and 

(B) in subparagraph (A), by striking "that are intermediate 
care facility services in an institution for the mentally re- 
tarded" and inserting "that are services in an intermediate care 
facility for the mentally retarded". 

(2) Section 1903(a)(7) of such Act (42 U.S.C. 1396b(a)(7)) is amended 
by inserting "subject to section 1919(g)(3)(B)," after "(7)". 

(3) Section 1910 of such Act (42 U.S.C. 13961) is amended— 

(A) by striking "skilled nursing facilities and" in the 
heading, 

(B) by striking subsection (a), and 

(C) by redesignating subsections Ob) and (c) as subsections (a) 
and (b), respectively. 

(4) Section 1866(c) of such Act (42 U.S.C. 1395cc(c)) is amended by 
striking paragraph (2) and by redesignating paragraph (3) as para- 
graph (2). 

SEC. 4213. ENFORCEMENT PROCESS. 

(a) In General.— Section 1919 of the Social Security Act, as 
inserted by section 4201 and amended by section 4202, is further 
amended by adding at the end the following new subsection: 
"(h) Enforcement Process.— 

"(1) In general. — If a State finds, on the basis of a standard, 
extended, or partial extended survey under subsection (g)(2) or 
otherwise, that a nursing facility no longer meets a requirement 



101 STAT. 1330-214 PUBLIC LAW 100-203— DEC. 22, 1987 

of subsection (b), (c), or (d), and further finds that the facility*s 
deficiencies — 

"(A) immediately jeopardize the health or safety of its 
residents, the State shall take immediate action to remove 
the jeopardy and correct the deficiencies through the 
remedy specified in paragraph (2XAXiii), or terminate the 
facility's participation under the State plan and may pro- 
vide, in addition, for one or more of the other remedies 
: ^ described in paragraph (2); or 

"(B) do not immediately jeopardize the health or safety of 
its residents, the State may— 

"(i) terminate the facility's participation under the 
State plan, 

"(ii) provide for one or more of the remedies de- 
scribed in paragraph (2), or 
"(iii) do both. 

Nothing in this paragraph shall be construed as restricting the 
remedies available to a State to remedy a nursing facility's 
deficiencies. If a State finds that a nursing facility meets the 
requirements of subsections 0)), (c), and (d), but, as of a previous 
ri • r period, did not meet such requirements, the State may provide 

for a civil money penalty under paragraph (2XA)(i) for the days 
in which it finds that the facility was not in compliance with 
' such requirements. 

Regulations. "(2) SPECIFIED REMEDIES.— 

"(A) Listing. — Except as provided in subparagraph (B)(ii), 
each State shall establish by law (whether statute or regula- 
i i tion) at least the following remedies: 

"(i) Denial of payment under the State plan with 
respect to any individual admitted to the nursing facil- 
ity involved after such notice to the public and to the 
facility as may be provided for by the State. 

"(ii) A civil money penalty assessed and collected, 
with interest, for each day in which the facility is or 
was out of compliance with a requirement of subsection 
(b), (c), or (d). Funds collected by a State as a result of 
imposition of such a penalty (or as a result of the 
imposition by the State of a civil money penalty for 
activities described in subsections (bX3XB)(iiXI), 
(bX3XBXiiXII), or (gX2XAXi)) shall be applied to the 
protection of the health or property of residents of 
nursing facilities that the State or the Secretary finds 
deficient, including payment for the costs of relocation 
of residents to other facilities, maintenance of oper- 
ation of a facility pending correction of deficiencies or 
closure, and reimbursement of residents for personal 
funds lost. 

"(iii) The appointment of temporary management to 
oversee the operation of the facilitv and to assure the 
health and safety of the facility s residents, where 
there is a need for temporary management while — 
"(I) there is an orderly closure of the facility, or 
"(II) improvements are made in order to bring 
the facility into compliance with all the require- 
ments of subsections (b), (c), and (d). 
The temporary management under this clause shall 
not be terminated under subclause (II) until the State 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-215 



has determined that the facility has the management 

capability to ensure continued compliance with all the 

requirements of subsections (b), (c), and (d). 

"(iv) The authority, in the case of an emergency, to 

close the facility, to transfer residents in that facility to 

other facilities, or both. 
The State also shall specify criteria, as to when and how 
each of such remedies is to be applied, the amounts of any 
fines, and the severity of each of these remedies, to be used 
in the imposition of such remedies. Such criteria shall be 
designed so as to minimize the time between the identifica- 
tion of violations and final imposition of the remedies and 
shall provide for the imposition of incrementally more 
severe fines for repeated or uncorrected deficiencies. In 
addition, the State may provide for other specified rem- 
edies, such as directed plans of correction. 

"(B) Deadune and guidance. — (i) Except as provided in 
clause (ii), as a condition for approval of a State plan for 
calendar quarters beginning on or after October 1, 1989, 
each State shall establish the remedies described in clauses 
(i) through (iv) of subparagraph (A) by not later than Octo- 
ber 1, 1989. The Secretary shall provide, through regula- Regulations, 
tions or otherwise by not later than October 1, 1988, guid- 
ance to States in establishing such remedies; but the failure 
of the Secretary to provide such guidance shall not relieve a 
State of the responsibility for establishing such remedies. 

"(ii) A State may establish alternative remedies (other 
than termination of participation) other than those de- 
scribed in clauses (i) through (iv) of subparagraph (A), if the 
State demonstrates to the Secretary's satisfaction that the 
alternative remedies are as effective in deterring non- 
compliance and correcting deficiencies as those described in 
subparagraph (A). 

"(C) Assuring prompt compuance.— If a nursing facility 
has not complied with any of the requirements of subsec- 
tions (b), (c), and (d), within 3 months after the date the 
facility is found to be out of compliance with such require- 
ments, the State shall impose the remedy described in 
subparagraph (AXi) for all individuals who are admitted to 
the facility after such date. 

"(D) Repeated noncompuance.— In the case of a nursing 
facility which, on 3 consecutive standard surveys conducted 
under subsection (gX2), has been found to have provided 
substandard quality of care, the State shall (regardless of 
what other remedies are provided) — 

"(i) impose the remedy described in subparagraph 

(AXi), and 

"(ii) monitor the facility under subsection (gX4XB), 
until the facility has demonstrated, to the satisfaction of 
the State, that it is in compliance with the requirements of 
subsections (b), (c), and (d), and that it will remain in 
compliance with such requirements. 

"(E) Funding.— The reasonable expenditures of a State to 
provide for temporary management and other expenses 
associated with implementing the remedies described in 
clauses (iii) and (iv) of subparagraph (A) shall be considered, 



101 STAT. 1330-216 PUBLIC LAW 100-203— DEC. 22, 1987 



for purposes of section 1903(aK7), to be necessary for the 
proper and efficient administration of the State plan. 

"(F) Incentives for high quauty care.— In addition to 
the remedies specified in this paragraph, a State may estab- 
lish a program to reward, through public recognition, incen- 
tive payments, or both, nursing facilities that provide the 
highest quality care to residents who are entitled to medical 
assistance under this title. For purposes of section 
1903(aX7), proper expenses incurred by a State in carrying 
out such a program shall be considered to be expenses 
necessary for the proper and efficient administration of the 
State plan under this title. 
"(3) Secretarial authority. — 

"(A) For state nursing facilities.— With respect to a 
State nursing facility, the Secretary shall have the author- 
ity and duties of a State under this subsection, including 
the authority to impose remedies described in clauses (i), 
(ii), and (iii) of paragraph (2XA). 

"(B) Other nursing facilities.— With respect to any 
other nursing facility in a State, if the Secretary finds that 
a nursing facility no longer meets a requirement of subsec- 
tion (b), (c), (d), or (e), and further finds that the facility's 
deficiencies — 

"(i) immediately jeopardize the health or safety of its 
residents, the Secretary shall take immediate action to 
remove the jeopardy and correct the deficiencies 
through the remedy specified in subparagraph (CXiii), 
or terminate the facility's participation under the State 
plan and may provide, in addition, for one or more of 
the other remedies described in subparagraph (C); or 
"(ii) do not immediately jeopardize the health or 
safety of its residents, the Secretary may impose any of 
the remedies described in subparagraph (C). 
Nothing in this subparagraph shall be construed as restrict- 
ing the remedies available to the Secretary to remedy a 
nursing facility's deficiencies. If the Secretary finds that a 
nursing facility meets such requirements but, as of a pre- 
vious period, did not meet such requirements, the Secretary 
may provide for a civil money penalty under subparagraph 
(CXii) for the days on which he finds that the facility was 
not in compliance with such requirements. 

"(C) Specified remedies. — The Secretary may take the 
following actions with respect to a finding that a facility 
has not met an applicable requirement: 

"(i) Denial of payment.— The Secretary may deny 
- any further payments to the State for medical assist- 
ance furnished by the facility to all individuals in the 
facility or to individuals admitted to the facility after 
the effective date of the finding. 

"(ii) Authority with respect to civil money pen- 
alties. — The Secretary may impose a civil money pen- 
alty in an amount not to exceed $10,000 for each day of 
noncompliance and the Secretary shall impose and 
collect such a penalty in the same manner as civil 
money penalties are imposed and collected under 
section 1128A. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-217 



"(iii) Appointment of temporary management. — In 
consultation with the State, the Secretary may appoint 
temporary management to oversee the operation of the 
facility and to assure the health and safety of the 
facility's residents, where there is a need for temporary 
management while — 

"(I) there is an orderly closure of the facility, or 
"(II) improvements are made in order to bring 
the facility into compliance with all the require- 
ments of subsections (b), (c), and (d). 
The temporary management under this clause shall 
not be terminated under subclause (II) until the Sec- 
retary has determined that the facility has the manage- 
ment capability to ensure continued compliance with 
all the requirements of subsections (b), (c), and (d). 
The Secretary shall specify criteria, as to when and how 
each of such remedies is to be applied, the amounts of any 
fines, and the severity of each of these remedies, to be used 
in the imposition of such remedies. Such criteria shall be 
designed so as to minimize the time between the identifica- 
tion of violations and final imposition of the remedies and 
shall provide for the imposition of incrementally more 
severe fines for repeated or uncorrected deficiencies. In 
addition, the Secretary may provide for other specified 
remedies, such as directed plans of correction. 

"(D) Continuation of payments pending remedi- 
ation. — The Secretary may continue payments, over a 
period of not longer than 6 months, under this title with 
respect to a nursing facility not in com.pliance with a 
requirement of subsection (b), (c), or (d), if — 

"(i) the State survey agency finds that it is more 
appropriate to take alternative action to assure compli- 
ance of the facility with the requirements than to 
terminate the certification of the facility, 

"(ii) the State has submitted a plan and timetable for 
corrective action to the Secretary for approval and the 
Secretary approves the plan of corrective action, and 
"(iii) the State agrees to repay to the Federal Govern- 
ment payments received under this subparagraph if 
the corrective action is not taken in accordance with 
the approved plan and timetable. 
The Secretary shall establish guidelines foi- approval of 
corrective actions requested by States under this subpara- 
graph. 

"(4) Effective period of denial of payment. — A finding to 
deny payment under this subsection shall terminate when the 
State or Secretary (or both, as the case may be) finds that the 
facility is in substantial compliance with all the requirements of 
subsections (b), (c), and (d). 

"(5) Immediate termination of participation for faciuty 
where state or secretary finds noncompuance and imme- 
DIATE JEOPARDY.— If either the State or the Secretary finds that 
a nursing facility has not met a requirement of subsection (b), 
(c), or (d), and finds that the failure immediately jeopardizes the 
health or safety of its residents, the State and the Secretary 
shall notify the other of such finding, and the State or the 
Secretary, respectively, shall take immediate action to remove 



101 STAT. 1330-218 PUBLIC LAW 100-203— DEC. 22, 1987 



the jeopardy and correct the deficiencies through the remedy 
specified in paragraph (2XAXiii) or (BXCXiii), or terminate the 
facility's participation under the State plan. If the facility's 
participation in the State plan is terminated by either the State 
or the Secretary, the State shall provide for the safe and orderly 
transfer of the residents eligible under the State plan consistent 
with the requirements of subsection (cX2). 

"(6) Special rules where state and secretary do not agree 
on finding of noncompuance. — 

"(A) State finding of noncompliance and no secretar- 
ial FINDING OF NONCOMPUANCE.— If the Secretary finds 
that a nursing facility has met all the requirements of 
subsections (b), (c), and (d), but a State finds that the facility 
has not met such requirements and the failure does not 
immediately jeopardize the health or safety of its residents, 
the State's findings shall control and the remedies imposed 
by the State shall be applied. 

**(B) Secretarial finding of noncompliance and no 
state finding of NONCOMPUANCE. — If the Secretary finds 
that a nursing facility has not met all the requirements of 
subsections (b), (c), and (d), and that the failure does not 
immediately jeopardize the health or safety of its residents, 
but the State has not made such a finding, the Secretary — 
"(i) may impose any remedies specified in paragraph 
(3 XC) with respect to the facility, and 

"(ii) shall (pending any termination by the Secretary) 
permit continuation of payments in accordance with 
paragraph (3XD). 
"(7) Special rules for timing of termination of participa- 
tion WHERE remedies OVERLAP. — If both the Secretary and the 
State find that a nursing facility has not met all the require- 
ments of subsections (b), (c), and (d), and neither finds 
that the failure immediately jeopardizes the health or safety of 
its residents — 

"(AXi) if both find that the facility's participation under 
the State plan should be terminated, the State's timing of 
any termination shall control so long as the termination 
date does not occur later than 6 months after the date of 
^: the finding to terminate; 

"(ii) if the Secretary, but not the State, finds that the 
facility's participation under the State plan should be 
terminated, the Secretary shall (pending any termination 
by the Secretary) permit continuation of payments in 
accordance with paragraph (3XD); or 

"(iii) if the State, but not the Secretary, finds that the 
facility's participation under the State plan should be 
terminated, the State's decision to terminate, and timing of 
such termination, shall control; and 

"(BXi) if the Secretary or the State, but not both, estab- 
lishes one or more remedies which are additional or alter- 
native to the remedy of terminating the facility's participa- 
tion under the State plan, such additional or alternative 
remedies shall also be applied, or 

"(ii) if both the Secretary and the State establish one or 
more remedies which are additional or alternative to the 
remedy of terminating the facility's participation under the 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-219 



State plan, only the additional or alternative remedies of 

the Secretary shall apply. 
"(8) Construction.— The remedies provided under this 
subsection are in addition to those otherwise available under 
State or Federal law and shall not be construed as limiting such 
other remedies, including any remedy available to an individual 
at common law. The remedies described in clauses (i), (iii), and 
(iv) of paragraph (2)(A) may be imposed during the pendency of 
any hearing. 

"(9) Sharing of information.— Notwithstanding any other 
provision of law, all information concerning nursing facilities 
required by this section to be filed with the Secretary or a State 
agency shall be made available to Federal or State employees 
for purposes consistent with the effective adm.inistration of 
programs established under this title and title XVIII, including 
investigations by State medicaid fraud control units.". 

(b) Conforming Amendments.— (1) Section 1902 of such Act (42 
U.S.C. 1396a) is amended by striking subsection (i). 

(2) Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended by 
striking the period at the end of paragraph (7) and inserting or" 
and by adding at the end the following new paragraph: 

"(8) with respect to any amount expended for medical assist- 
ance for nursing facility services to reimburse (or otherwise 
compensate) a nursing facility for payment of a civil money 
penalty imposed under section 1919(h).". 

SEC. 4214. EFFECTIVE DATES. 

(a) New Requirements and Survey and Certification 
Process. — Except as otherwise specifically provided in section 1919 
of the Social Security Act, the amendments made by sections 4211 
and 4212 (relating to nursing facility requirements and survey and 
certification requirements) shall apply to nursing facility services 
furnished on or after October 1, 1990, without regard to whether 
regulations to implement such amendments are promulgated by 
such date; except that section 1902(a)(28XB) of the Social Security 
Act (as amended by section 4211(b) of this Act), relating to requiring 
State medical assistance plans to specify the services included in 
nursing facility services, shall apply to calendar quarters beginning 
more than 6 months after the date of the enactment of this Act, 
without regard to whether regulations to implement such section 
are promulgated by such date. 

(h) Enforcement.— (1) Except as otherwise specifically provided in 
section 1919 of the Social Security Act, the amendments made by 
section 4213 of this Act apply to payments under title XIX of the 
Social Security Act for calendar quarters beginning on or after the 
date of the enactment of this Act, without regard to whether 
regulations to implement such amendments are promulgated by 
such date. 

(c) Transitional Rule. — In applying the amendments made by 
this part for services furnished before October 1, 1990— 

(A) any reference to a nursing facility is deemed a reference 
to a skilled nursing facility or intermediate care facility (other 
than an intermediate care facility for the mentally retarded), 
and 

(B) with respect to such a skilled nursing facility or intermedi- 
ate care facility, any reference to a requirement of subsection 



42 use 1396r 
note. 



101 STAT. 1330-220 PUBLIC LAW 100-203— DEC. 22, 1987 

(b), (c), or (d), is deemed a reference to the provisions of section 
1861(j) or section 1905(c), respectively, of the Social Security Act. 
(d) Waiver of Paperwork Reduction. — Chapter 35 of title 44, 
United States Code, shall not apply to information required for 
purposes of carrying out this part and implementing the amend- 
ments made by this part. 

SEC. 4215. ANNUAL REPORT. 

The Secretary of Health and Human Services shall report to the 
Congress annually on the extent to which nursing facilities are 
complying with the requirements of subsections (b), (c), and (d) of 
section 1919 of the Social Security Act (as added by the amendments 
made by this part) and the number and type of enforcement actions 
taken by States and the Secretary under section 1919(h) of such Act 
(as added by section 4213 of this Act). 

42 use 1396r. SEC. 4216. CONSTRUCTION. 

Section 1919 of the Social Security Act is amended by adding at 
the end the following new subsection: 

"(i) Construction. — Where requirements or obligations under 
this section are identical to those provided under section 1819 of this 
Act, the fulfillment of those requirements or obligations under 
section 1819 shall be considered to be the fulfillment of the cor- 
responding requirements or obligations under this section.". 

SEC. 4217. FINAL REGULATIONS WITH RESPECT TO PLANS OF CORREC- 
TION OR REDUCTION. 

(a) In General. — Not later than 30 days after the date of enact- 
ment of this Act, the Secretary of Health and Human Services shall 
promulgate final regulations to implement the amendments made 
by section 9516 of the Consolidated Omnibus Budget Reconciliation 
Act of 1985. 

(b) The regulations promulgated under paragraph (1) shall be 
effective as if promulgated on the date of enactment of the Consoli- 
dated Omnibus Budget Reconciliation Act of 1985. 

SEC. 4218. MEDICAID CERTIFICATIONS AND RECERTIFICATIONS FOR CER- 
TAIN SERVICES. 

(a) In General.— Section 1902(a)(44) of the Social Security Act (42 
U.S.C. 1396a(a)(44)) is amended— 

(1) in subparagraph (A) — 

(A) by striking "physician certifies" and inserting "physi- 
cian (or, in the case of skilled nursing facility services or 
intermediate care facility services, a physician, or a nurse 
practitioner or clinical nurse specialist who is not an em- 
ployee of the facility but is working in collaboration with a 

£ physician) certifies* , and 

(B) by striking "the physician, or a physician assistant or 
nurse practitioner under the supervision of a physician," 
and inserting "a physician, a physician assistant under the 
supervision of a physician, or, in the case of skilled nursing 
facility services or intermediate care facility services, a 
physician, or a nurse practitioner or clinical nurse special- 
ist who is not an employee of the facility but is working in 
collaboration with a physician,"; and 

(2) in subparagraph (B), by striking "a physician;" and insert- 
ing "a physician, or, in the case of skilled nursing facility 



42 use 1396r 
note. 



Effective date. 
42 use 1396r-3 
note. 



100 Sta ;. 82. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-221 



services or intermediate care facility services, a physician, or a 
nurse practitioner or clinical nurse specialist who is not an 
employee of the facility but is working in collaboration with a 
physician;". 

(b) Effective Date. — The amendments made by subsection (a) 
shall apply with respect to certifications or recertifications during 
the period beginning on July 1, 1988, and ending on October 1, 1990. 

Subtitle D — Vaccine Compensation 



SEC. 4301. SHORT TITLE, REFERENCE. 

(a) Short Title.— This subtitle 



42 use 1396a 
note. 



Vaccine 
Compensation 
Amendments of 
1987. 



may be cited as the "Vaccine 42 USC 201 note. 
Compensation Amendments of 1987". 

(b) Reference. — Whenever in this subtitle (other than in section 
4302(a)) an amendment or repeal is expressed in terms of an amend- 
ment to, or repeal of, a section or other provision, the reference shall 
be considered to be made to a section or other provision of the Public 
Health Service Act. 

SEC. 4302. EFFECTIVE DATE. 

(a) In General.— Section 323(a) of the National Childhood Vac- 
cine Injury Act of 1986 (42 U.S.C. 300aa-l note) is amended by 
striking out "Subtitle 2 of such title and this title shall take effect 
on the effective date of a tax" and all that follows in that section 
and inserting in lieu thereof "parts A and B of subtitle 2 of such title 
shall take effect on October 1, 1988 and parts C and D of such title 
and this title shall take effect on the date of the enactment of the 
Vaccine Compensation Amendments of 1987.". 

(b) References. 

(1) Sections 2111, 2115, 2119(a), 2122, 2123, 2125, 2126, 2127, 
and 2128 (42 U.S.C. 300aa-ll, 300aa-15, 300aa-199a), 300aa-22, 
300aa-23, 300aa-25, 300aa-26, 300aa-27, 300aa-28) are each 
amended by striking out "effective date of this subtitle" each 
place it appears and inserting in lieu thereof "effective date of 
this part". 

(2) Sections 2111(aX5XA), 2115(eX2) and 2116 (42 U.S.C. 300aa- 
ll(aX5XA), 300aa-15(eX2), 300a-16) are each amended by strik- 
ing out "effective date of this title" each place it appears and 
inserting in lieu thereof "effective date of this part". 

SEC. 4303. COMPENSATION. 

(a) Source.— Section 2115 (42 U.S.C. 300aa-15) is amended by 
adding at the end the following: 
"(i) Source of Compensation.— 

"(1) Payment of compensation under the Program to a peti- 
tioner for a vaccine-related injury or death associated with the 
administration of a vaccine before the effective date of this part 
shall be made from appropriations under subsection (i). 

"(2) Payment of compensation under the Program to a peti- 
tioner for a vaccine-related injury or death associated with the 
administration of a vaccine on or after the effective date of this 
part shall be made from the Vaccine Injury Compensation Trust 
Fund established under section 9510 of the Internal Revenue 
Code of 1986.". 



42 USC 
300aa-19. 



42 USC 
300aa-16. 



101 STAT. 1330-222 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 
300aa-15. 



42 use 
300aa-12. 



(b) Authorization.— Section 2115 (42 U.S.C. 300aa-15) (as 
amended by subsection (a)) is amended by adding at the end 
the following: 

"(j) Authorization. — For the payment of compensation under the 
Program to a petitioner for a vaccine-related injury or death associ- 
ated with the administration of a vaccine before the effective date of 
this part there are authorized to be appropriated $80,000,000 for 
fiscal year 1989, $80,000,000 for fiscal year 1990, $80,000,000 for 
fiscal year 1991, and $80,000,000 for fiscal year 1992. Amounts 
appropriated under this subsection shall remain available until 
expended.". 

(c) Minimum.— Section 2115(a)(1) (42 U.S.C. 300a- 15(a)(1)) is 
amended by striking out the last sentence of subparagraphs 

\) and (B). 

(d) Lump Sum. — 

(1) Section 2115 (42 U.S.C. 300aa-15) is amended— 

(A) by striking out the last two sentences after paragraph 
(4) in subsection (a), and 

(B) by adding at the end of the first subsection (f) the 
following: 

"(4)(A) Except as provided in subparagraph (B), payment of 
compensation under the Program shall be made in a lump sum 
determined on the basis of the net present value of the elements 
of the compensation. 

"(B) In the case of a payment of compensation under the 
Program to a petitioner for a vaccine-related injury or death 
associated with the administration of a vaccine before the effec- 
tive date of this part the compensation shall be paid in 4 equal 
annual installments. If the appropriations under subsection (i) 
are insufficient to make a payment of an annual installment, 
section 2111(a) shall not apply to a civil action for damages 
brought by the petitioner entitled to the payment.". 

(2XA) Subsections (e) and (f) of section 2112 (42 U.S.C. 300a-12) 
are repealed and subsection (g) of such section is redesignated as 

(B) Section 2118 (42 U.S.C. 300aa-18) is repealed. 

(e) Limit.— Section 2115(b) (42 U.S.C. 300aa-15(b)) is amended by 
striking out "shall only include the compensation described in 
paragraphs (IXA) and (2) of subsection (a)" and inserting in lieu 
thereof the following: "may not include the compensation described 
in paragraph (IXB) of subsection (a) and may include attorneys' fees 
and other costs included in a judgment under subsection (e), except 
that the total amount that may be paid as compensation under 
paragraphs (3) and (4) of subsection (a) and included as attorneys' 
fees and other costs under subsection (e) may not exceed $30,000". 

(f) Termination of Program. — Part D of title XXI is amended by 
adding at the end the following: 



termination of program 



42 use 

300aa-34. 



"Sec. 2134. (a) Reviews. — The Secretary shall review the number 
of awards of compensation made under the program to petitioners 
under section 2111 for vaccine-related injuries and deaths associated 
with the administration of vaccines on or after the effective date of 
this part as follows: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-223 

"(1) The Secretary shall review the number of such awards 
made in the 12-month period beginning on the effective date of 
this part. 

"(2) At the end of each 3-month period beginning after the 
expiration of the 12-month period referred to in paragraph (1) 
the Secretary shall review the number of such awards made in 
the 3-month period. 
"(b) Report.— 

"(1) If in conducting a review under subsection (a) the Sec- 
retary determines that at the end of the period reviewed the 
total number of awards made by the end of that period and 
accepted under section 2121(a) exceeds the number of awards 
listed next to the period reviewed in the table in paragraph (2)— 
"(A) the Secretary shall notify the Congress of such deter- 
mination, and 

"(B) beginning 180 days after the receipt by Congress of a 
notification under paragraph (1), no petition for a vaccine- 
related injury or death associated with the administration 
of a vaccine on or after the effective date of this part may 
be filed under section 2111. 
Section 2111(a) and part B shall not apply to civil actions for 
damages for a vaccine-related injury or death for which a 
petition may not be filed because of subparagraph (B). 
"(2) The table referred to in paragraph (1) is as follows: 

Total number of awards 
by the end of the period 



' "Period reviewed: reviewed 

12 months after the effective date of part 150 

13th through the 15th month after such date 188 

16th through the 18th month after such date 225 

19th through the 21st month after such date 263 

22nd through the 24th month after such date 300 

25th through the 27th month after such date 338 

28th through the 30th month after such date 375 

31st through the 33rd month after such date 413 

34th through the 36th month after such date 450 

37th through the 39th month after such date 488 

40th through the 42nd month after such date 525 

43rd through the 45th month after such date 563 

46th through the 48th month after such date 600.". 



(g) Technical.— Section 2115 (42 U.S.C. 300a-15) is amended by 42 use 
redesignating the second subsection (f) and subsection (g) as subsec- 300aa-i5. 
tions (g) and (h), respectively. 

SEC. 4304. PETITIONS. 

(a) Appucation of Limits.— Section 2111(a) (42 U.S.C. 300aa-ll) is 
amended by adding at the end the following: 

"(8) This subsection applies only to a person who has sustained a 
vaccine-related injury or death and who is qualified to file a petition 
for compensation under the Program.". 

(b) QUAUFICATION.— 

(1) Section 2111(b)(1) (42 U.S.C. 300a- 11(b)(1)(A)) is amended by 42 use 
striking out "may file" and inserting in lieu thereof "may, if the 300aa-ii. 
person meets the requirements of subsection (c)(1), file". 

(2) Section 2111(c)(1)(D) (42 U.S.C. 300a-l 1(c)(1)(D)) is amended 
(A) by striking out "for more than 1 year" and inserting in lieu 
thereof "for more than 6 months", (B) by striking out ", (ii)" and 



^°Copy read "Period reviewed:". 



101 STAT. 1330-224 



PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 
300aa-21. 



42 use 
300aa-31. 



42 use 

300aa-ll. 



inserting in lieu thereof "and", and (C) by striking out "(iii)" 
and inserting in lieu thereof "(ii)". 

(c) Withdrawal.— Section 2121 (42 U.S.C. 300a-21) is amended by 
redesignating subsection (b) as subsection (c) and by inserting after . 
subsection (a) the following: ( 

"(b) Withdrawal of Petition. — If the United States Claims Court 
fails to enter a judgment under section 2112 on a petition filed under 
section 2111 within 365 days after the date on which the petition 
was filed, the petitioner may submit to the court a notice in writing 
withdrawing the petition. Such a notice shall be filed not later than 
90 days after the expiration of such 365-day period. A person who 
has submitted a notice under this subsection may, notwithstanding 
section 2111(a)(2), thereafter maintain a civil action for damages in a 
State or Federal court without regard to part B and consistent with 
otherwise applicable law.". 

SEC. 4305. CITIZEN'S ACTIONS. 

Section 2131(c) (42 U.S.C. 300a-31(c)) is amended by striking out 
"to any party, whenever the court determines that such award is 
appropriate" and inserting in lieu thereof "to any plaintiff who 
substantially prevails on one or more significant issues in the 
action". 

SEC. 4306. VACCINE ADMINISTRATORS. 

Section 2111(a) (42 U.S.C. 300a-ll) is amended by striking out 
"vaccine manufacturer" each place it appears and inserting in lieu 
thereof "vaccine administrator or manufacturer". 

SEC. 4307. COURT JURISDICTION. 

Subtitle 2 of title XXI is amended as follows: 

(1) Section 2111(a)(1) (42 U.S.C. 300aa-ll(aXl)) is amended by 
striking out "with the United States district court for the 
district in which the petitioner resides or the injury or death 
occurred" and inserting in lieu thereof "with the United States 
Claims Court". 

(2) Section 2111(a)(2)(A)(ii) (42 U.S.C. 300aa-ll(a)(2)(AXii)) is 
amended by striking out "a district court of the United States" 
and inserting in lieu thereof "the United States Claims Court". 

(3) Section 2112 (42 U.S.C. 300aa-12) is amended— 

(A) in subsection (a), by striking out "district courts of the 
United States" and inserting in lieu thereof "United States 
Claims Court" and by striking out "the courts" and insert- 
ing in lieu thereof "the court", 

(B) in subsection (c)(1), by striking out "the district court 
of the United States in which the petition is filed" and 
inserting in lieu thereof "the United States Claims Court", 
and 

(C) in subsection (g), by striking out "a district court of 
the United States" and inserting in lieu thereof "the 
United States Claims Court" and by striking out "for the 
circuit in which the court is located" and inserting in lieu 
thereof "for the Federal Circuit". 

(4) Section 2113(c) (42 U.S.C. 300aa-13(c)) is amended by strik- 
ing out "a district court of the United States" and inserting in 
lieu thereof "the United States Claims Court". 



Copy read "300a-31(c)" 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-225 



(5) Section 2115(e)(1) (42 U.S.C. 300aa-15{eXl)) is amended by 
striking out "of a court" and inserting in lieu thereof "of the 
United States Claims Court". 

(6) Paragraph (2) of subsection (f) of section 2115 {42 U.S.C. 
300aa-15) is amended by striking out "district court of the 
United States" and inserting in lieu thereof "United States 
Claims Court". 

(7) Section 2117(a) (42 U.S.C. 300aa-17(a)) is amended by 
striking out "(1)", by running in the text of paragraph (li into 
the subsection heading, and by striking out paragraph (2). 

(8) Section 2121(a) (42 U.S.C. 300aa-21(a)) is amended by 
striking out "a district court of the United States" and inserting 
in lieu thereof "the United States Claims Court" and by striking 
out "a court" each place it occurs and inserting in lieu thereof 
"the court". 

(9) Section 2123(e) (42 U.S.C. 300aa-23(e)) is amended by strik- 
ing out "a district court of the United States" and inserting in 
lieu thereof "the United States Claims Court". 

Subtitle E— Rural Health 

SEC. 4401. OFFICE OF RURAL HEALTH POLICY. 

Title VII of the Social Security Act is amended by adding at the 
end thereof the following new section: 

"office OF RURAL HEALTH POUCY 

"Sec. 711. (a) There shall be established in the Department of Establishment. 
Health and Human Services (in this section referred to as the use 912. 
'Department') Office of Rural Health Policy (in this section 

referred to as the 'Office'). The Office shall be headed by a Director, 
who shall advise the Secretary on the effects of current policies and 
proposed statutory, regulatory, administrative, and budgetary 
changes in the programs established under titles XVIII and XIX on 
the financial viability of small rural hospitals, the ability of rural 
areas (and rural hospitals in particular) to attract and retain physi- 
cians and other health professionals, and access to (and the quality 
of) health care in rural areas. 

"(b) In addition to advising the Secretary with respect to the 
matters specified in subsection (a), the Director, through the Office, 
shall- 

"(1) oversee compliance with the requirements of section 
1102(b) of this Act and section 4083 of the Omnibus Budget 
Reconciliation Act of 1987, 

"(2) establish and maintain a clearinghouse for collecting and 
disseminating information on— 

"(A) rural health care issues, 

"(B) research findings relating to rural health care, and 
"(C) innovative approaches to the delivery of health care 
in rural areas, 

"(3) coordinate the activities within the Department that 
relate to rural health care, and 



Copy read " "Department")'". 



19-139 0 - ® — 8 (203) 



101 STAT. 1330-226 PUBLIC LAW 100-203— DEC. 22, 1987 



Federal Register, 
publication. 



Federal Register, 
publication. 



42 use 1302 
note. 



42 use 1395b-l 
note. 



"(4) provide information to the Secretary and others in the 
Department with respect to the activities, of other Federal 
departments and agencies, that relate to rural health care.". 

SEC. 4402. IMPACT ANALYSES OF MEDICARE AND MEDICAID RULES AND 
REGULATIONS ON SMALL RURAL HOSPITALS. 

(a) In General.— Section 1102 of the Social Security Act (42 U.S.C. 
1302) is amended — 

(1) by inserting "(a)" after "Sec. 1102.", and 

(2) by adding at the end thereof the following new subsection: 
"(b)(1) Whenever the Secretary publishes a general notice of 

proposed rulemaking for any rule or regulation proposed under title 
XVIII, title XIX, or part B of this title that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals, the Secretary shall prepare and make available for public 
comment an initial regulatory impact analysis. Such analysis shall 
describe the impact of the proposed rule or regulation on such 
hospitals and shall set forth, with respect to small rural hospitals, 
the matters required under section 603 of title 5, United States Code, 
to be set forth with respect to small entities. The initial regulatory 
impact analysis (or a summary) shall be published in the Federal 
Register at the time of the publication of general notice of proposed 
rulemaking for the rule or regulation. 

"(2) Whenever the Secretary promulgates a final version of a rule 
or regulation with respect to which an initial regulatory impact 
analysis is required by paragraph (1), the Secretary shall prepare a 
final regulatory impact analysis with respect to the final version of 
such rule or regulation. Such analysis shall set forth, with respect to 
small rural hospitals, the matters required under section 604 of title 
5, United States Code, to be set forth with respect to small entities. 
The Secretary shall make copies of the final regulatory impact 
analysis available to the public and shall publish, in the Federal 
Register at the time of publication of the final version of the rule or 
regulation, a statement describing how a member of the public may 
obtain a copy of such analysis. 

"(3) If a regulatory flexibility analysis is required by chapter 6 of 
title 5, United States Code, for a rule or regulation to which this 
subsection applies, such analysis shall specifically address the 
impact of the rule or regulation on small rural hospitals.". 

(b) Effective Date. — The amendments made by paragraph (1) 
shall apply to regulations proposed more than 30 days after the date 
of the enactment of this Act. 

SEC. 4403. SET ASIDE FOR EXPERIMENTS AND DEMONSTRATION 
PROJECTS RELATING TO RURAL HEALTH CARE ISSUES. 

(a) Set Aside. — Not less than ten percent of the total amounts 
expended in each fiscal year by the Secretary of Health and Human 
Services (in this section referred to as the "Secretary") after 
October 1, 1988, with respect to experiments and demonstration 
projects authorized by section 402 of the Social Security Amend- 
ments of 1967 and the experiments and demonstration projects 
authorized by the Social Security Amendments of 1972 shall be 
expended for experiments and demonstration projects relating 
exclusively or substantially to rural health issues, including Ot>ut not 
limited to) the impact of the payment methodology under section 
1886(d) of the Social Security Act on the financial viability of small 
rural hospitals, the effect of medicare payment policies on the 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-227 



ability of rural areas (and rural hospitals in particular) to attract 
and retain physicians and other health professionals, the appro- 
priateness of medicare conditions of participation and staffing 
requirements for small rural hospitals, and the impact of medicare 
policies on access to (and the quality of) health care in rural areas. 

(b) Agenda. — The Secretary of Health and Human Services shall 
establish an agenda of experiments and demonstration projects, 
relating exclusively or substantially to rural health issues, that are 
in progress or have been proposed, and shall include such agenda in 
the annual report submitted pursuant to section 1875(b) of the Social 
Security Act. The agenda shall be accompanied by a statement 
setting forth the amounts that have been obligated and expended 
with respect to such experiments and projects in the current and 
most recently completed fiscal years. 



TITLE V— ENERGY AND ENVIRONMENT 
PROGRAMS 



Subtitle A — Nuclear Waste Amendments 



'Nuclear Waste Policy Amend- 



SEC. 5001. SHORT TITLE. 

This subtitle may be cited as the 
ments Act of 1987". 

SEC. 5002. DEFINITIONS. 

Section 2 of the Nuclear Waste Policy Act of 1982 (42 U.S.C. 10101) 
is amended by adding at the end the following new paragraphs: 

"(30) The term 'Yucca Mountain site' means the candidate 
site in the State of Nevada recommended by the Secretary to 
the President under section 112(b)(1)(B) on May 27, 1986. 

"(31) The term 'affected unit of local government' means the 
unit of local government with jurisdiction over the site of a 
repository or a monitored retrievable storage facility. Such term 
may, at the discretion of the Secretary, include units of local 
government that are contiguous with such unit. 

"(32) The term 'Negotiator' means the Nuclear Waste Nego- 
tiator. 

"(33) As used in title IV, the term 'Office' means the Office of 
the Nuclear Waste Negotiator established under title IV of this 
Act. 

"(34) The term 'monitored retrievable storage facility' means 
the storage facility described in section 141(b)(1).". 

PART A— REDIRECTION OF THE NUCLEAR 
WASTE PROGRAM 



Nuclear Waste 
Policy 

Amendments 
Act of 1987. 
42 use 10101 
note. 



SEC. 5011. FIRST REPOSITORY. 

(a) Site Specific Activities. — Title I of the Nuclear Waste Policy 
Act of 1982 (42 U.S.C. 10121-10171) is amended by adding at the end 
the following new subtitle: 



101 STAT. 1330-228 PUBLIC LAW 100-203— DEC. 22, 1987 

'^Subtitle E — Redirection of the Nuclear Waste Program 
"selection of yucca mountain site 

42 use 10172. "Sec. 160. (a) In General.— (1) The Secretary shall provide for an 

orderly phase-out of site specific activities at all candidate sites 
other than the Yucca Mountain site. 

"(2) The Secretary shall terminate all site specific activities (other 
than reclamation activities) at all candidate sites, other than the 
Yucca Mountain site, within 90 days after the date of enactment of 
the Nuclear Waste Policy Amendments Act of 1987. 

"O^) Effective on the date of the enactment of the Nuclear Waste 
Policy Amendments Act of 1987, the State of Nevada shall be 
eligible to enter into a benefits agreement with the Secretary under 
section 170.". 

(b) Site Recommendation to the President.— Section 112(b) of 
the Nuclear Waste Policy Act of 1982 (42 U.S.C. 101320))) is amended 
by- 

(1) striking out paragraph (1)(C) and redesignating the subse- 
quent subparagraphs accordingly; and 

(2) in subparagraph (C) (as redesignated) by striking "sub- 
' , paragraphs (B) and (C)" and inserting "subparagraph (B)' . 

(c) Termination of Candidate Site Screening. — Section 112 of 
the Nuclear Waste Policy Act of 1982 (42 U.S.C. 10132) is amended 

' by striking all of subsection (d) and redesignating subsequent subsec- 

tions accordingly. 

(d) Timely Site Characterization.— Section 112 of the Nuclear 
Waste Policy Act of 1982 (42 U.S.C. 10132) is amended by striking all 
of subsection (f) and redesignating subsequent subsections 
accordingly. 

(e) Site Characterization. — Section 113(a) of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10133(a)) is amended— 

(1) by striking "State involved" and all that follows through 
"tribe involved" and inserting "State of Nevada"; and 

(2) by striking "beginning" and all that follows through "geo- 
logical media" and inserting "at the Yucca Mountain site". 

(f) Commission and States.— Section 1130b) of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10133(b)) is amended— 

(1) in paragraph (1) — 

(A) by striking "any candidate site" and inserting "the 
Yucca Mountain site"; 

(B) by striking "either" and all that follows through "may 
be" and insert "the Governor or legislature of the State of 
Nevada"; 

(2) in paragraph (2), by striking "at any candidate site" and 
inserting "at the Yucca Mountain site"; and 

(3) in paragraph (3)— 

(A) by striking "a candidate site" and inserting "the 
Yucca Mountain site"; 

(B) by striking "either"; and 

(C) by striking "the State" and all that follows through 
"may be" and inserting "the State of Nevada". 

(g) Restrictions.— Section 113(c) of the Nuclear Waste Policy Act 
of 1982 (42 U.S.C. 10133(c)) is amended— 

(1) in paragraph (1) — 



"Copy read "(C), (as". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-229 

(A) by striking "any candidate site" and inserting "the 
Yucca Mountain site"; and 

(B) by striking "such candidate site" each place it appears 
and inserting "such site"; 

(2) in paragraph (2), by striking "candidate" each place it 
appears; and 

(3) by striking paragraphs (3) and (4) and inserting the 
following: 

"(3) If the Secretary at any time determines the Yucca Mountain 
site to be unsuitable for development as a repository, the Secretary 
shall- 

"(A) terminate all site characterization activities at such site; 

"(B) notify the Congress, the Governor and legislature of 
Nevada of such termination and the reasons for such termi- 
nation; 

"(C) remove any high-level radioactive waste, spent nuclear 
fuel, or other radioactive materials at or in such site as 
promptly as practicable; 

"(D) take reasonable and necessary steps to reclaim the site 
and to mitigate any significant adverse environmental impacts 
caused by site characterization activities at such site; 

"(E) suspend all future benefits payments under subtitle F 
with respect to such site; and 

"(F) report to Congress not later than 6 months after such Reports, 
determination the Secretary's recommendations for further 
action to assure the safe, permanent disposal of spent nuclear 
fuel and high-level radioactive waste, including the need for 
new legislative authority.", 
(h) Hearings and Presidential Recommendation. — Section 
114(a) of the Nuclear Waste Policy Act of 1982 (42 U.S.C. 10134(a)) is 
amended — 

(1) in paragraph (1) — 

(A) by striking "each site" through "development of a 
repository" and inserting "the Yucca Mountain site"; 

(B) by striking "in which such site is located"; 

(C) by striking "not less than 3" and all that follows 
through "subsequent repositories" and inserting "the 
Yucca Mountain site"; 

(D) by striking "in which such site" and all that follows 
through "case may be" and insert "of Nevada"; 

(E) by striking the sentence beginning with "In making 
site recommendations"; 

(F) by amending subparagraph (D) to read as follows: 
"(D) a final environmental impact statement prepared for 

the Yucca Mountain site pursuant to subsection (f) and the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321 
et seq.), together with comments made concerning such 
environmental impact statement by the Secretary of the 
Interior, the Council on Environmental Quality, the 
Administrator, and the Commission, except that the Sec- 
retary shall not be required in any such environmental 
impact statement to consider the need for a repository, the 
alternatives to geological disposal, or alternative sites to 
the Yucca Mountain site;"; and 

(G) in subparagraph (H), by striking "the State" and all 
that follows through the end of the sentence and inserting 
"the State of Nevada"; 



101 STAT. 1330-230 PUBLIC LAW 100-203— DEC. 22, 1987 

(2) by striking paragraphs (2) and (3) and inserting the 
following: 

President of U.S. "(2)(A) If, after recommendation by the Secretary, the President 
considers the Yucca Mountain site qualified for application for a 
construction authorization for a repository, the President shall 
submit a recommendation of such site to Congress. 

"(B) The President shall submit with such recommendation a copy 
of the statement for such site prepared by the Secretary under 
paragraph (1)."; and 

(3) in paragraph (4) by— 

(A) striking "(4)(A)" and inserting "(3XA)"; 
; (B) striking "any site under this subsection" and insert- 

ing "the Yucca Mountain site"; and 
(C) by striking "report" and inserting "statement", 
(i) Submission of Application.— Section 114(b) of the Nuclear 
Waste Policy Act of 1982 (42 U.S.C. 10134(b)) is amended— 

(1) by striking "a site for a repository" and inserting "the 
Yucca Mountain site"; and 

(2) by striking "in which" and all that follows through "may 
be," and inserting "of Nevada". 

(j) Commission Action.— Section 114(d) of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10134(d)) is amended in the first 
sentence — 

(1) by striking "than — " and all that follows through "(2) the 
expiration" and inserting "than the expiration"; and 

(2) by striking "(e)(2); whichever occurs later" and inserting 

"(e)(2)". 

(k) Project Decision Schedule. — Section 114(e) of the Nuclear 
Waste Policy Act of 1982 (42 U.S.C. 10134(e)) is amended by striking 
"repository involved" and inserting "repository". 

(1) Environmental Impact Statement. — Section 114(f) of the Nu- 
clear Waste Policy Act of 1982 (42 U.S.C. 10134(f)) is amended to 
read as follows: 

"(f) Environmental Impact Statement.— (1) Any recommenda- 
tion made by the Secretary under this section shall be considered a 
major Federal action significantly affecting the quality of the 
human environment for purposes of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.). A final environmental 
impact statement prepared by the Secretary under such Act shall 
accompany any recommendation to the President to approve a site 
for a repository. 

"(2) With respect to the requirements imposed by the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), compli- 
ance with the procedures and requirements of this Act shall be 
deemed adequate consideration of the need for a repository, the time 
of the initial availability of a repository, and all alternatives to the 
isolation of high-level radioactive waste and spent nuclear fuel in a 
repository. 

"(3) For purposes of complying with the requirements of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) 
and this section, the Secretary need not consider alternate sites to 
the Yucca Mountain site for the repository to be developed under 
this subtitle. 

"(4) Any environmental impact statement prepared in connection 
with a repository proposed to be constructed by the Secretary under 
this subtitle shall, to the extent practicable, be adopted by the 
Commission in connection with the issuance by the Commission of a 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-231 



construction authorization and license for such repository. To the 
extent such statement is adopted by the Commission, such adoption 
shall be deemed to also satisfy the responsibilities of the Commission 
|j under the National Environmental Policy Act of 1969 (42 U.S.C„ 
4321 et seq.) and no further consideration shall be required, except 
that nothing in this subsection shall affect any independent respon- 

I sibilities of the Commission to protect the public health and safety 
I! under the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.X 

"(5) Nothing in this Act shall be construed to amend or otherwise 
detract from the licensing requirements of the Nuclear Regulatory 

II Commission established in title II of the Energy Reorganization Act 
'l of 1974 (42 U.S.C. 584 let seq.). 

"(6) In any such statement prepared with respect to the repository 0 ^ 

I to be constructed under this subtitle, the Nuclear Regulatory 
I Commission need not consider the need for a repository, the time of 
I initial availability of a repository, alternate sites to the Yucca 
il Mountain site, or nongeologic alternatives to such site.". 

(m) On-Site Representative. — Section 117 of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10137) is amended by adding at the end 
, the following new subsection: 

I "(d) On-Site Representative. — The Secretary shall offer to any 
State, Indian tribe or unit of local government within whose juris- 
1 diction a site for a repository or monitored retrievable storage 
I facility is located under this title an opportunity to designate a 
I representative to conduct on-site oversight activities at such site. 
,i Reasonable expenses of such representatives shall be paid out of the 
! Waste Fund.". 

SEC. 5012. SECOND REPOSITORY. 

Subtitle E of title I of the Nuclear Waste Policy Act of 1982 (as 
created by section 5011 of this Act) is amended by adding at the end 
jll the following new section: 

"siting a second repository 

"Sec. 161. (a) Congressional Action Required.— The Secretary 42 use ioi72a. 
may not conduct site-specific activities with respect to a second 
repository unless Congress has specifically authorized and appro- 
priated funds for such activities. 

"(b) Report. — The Secretary shall report to the President and to 
Congress on or after January 1, 2007, but not later than January 1, 
2010, on the need for a second repository. 
"(c) Termination of Granite Research.— Not later than 6 
' months after the date of the enactment of the Nuclear Waste Policy 
' Amendments Act of 1987, the Secretary shall phase out in an 
i, orderly manner funding for all research programs in existence on 
'I such date of enactment designed to evaluate the suitability of 
' crystalline rock as a potential repository host medium, 

"(d) Additional Siting Criteria. — In the event that the Secretary 
at any time after such date of enactment considers any sites in 
crystalline rock for characterization or selection as a repository, the 
! Secretary shall consider (as a supplement to the siting guidelines 
under section 112) such potentially disqualifying factors as — 
"(1) seasonal increases in population; 

"(2) proximity to public drinking water supplies, including 
those of metropolitan areas; and 



101 STAT. 1330-232 PUBLIC LAW 100-203— DEC. 22, 1987 



"(3) the impact that characterization or siting decisions would 
have on lands owned or placed in trust by the United States for 
Indian tribes.". 

PART B— MONITORED RETRIEVABLE STORAGE 

SEC. .5021. AUTHORIZATION OF MONITORED RETRIEVABLE STORAGE. 

Subtitle C of the Nuclear Waste Policy Act of 1982 is amended 
by adding at the end the following new sections: 

"authorization of MONITORED RETRIEVABLE STORAGE 

42 use 10162. "Sec. 142. (a) Nullification of Oak Ridge Siting Proposal.— 

The proposal of the Secretary (EC- 1022, 100th Congress) to locate a 
monitored retrievable storage facility at a site on the Clinch River 
in the Roane County portion of Oak Ridge, Tennessee, with alter- 
native sites on the Oak Ridge Reservation of the Department of 
Energy and on the former site of a proposed nuclear powerplant in 
Hartsville, Tennessee, is annulled and revoked. In carrying out the 
provisions of sections 144 and 145, the Secretary shall make no 
presumption or preference to such sites by reason of their previous 
selection. 

"(b) Authorization.— The Secretary is authorized to site, con- 
struct, and operate one monitored retrievable storage facility subject 
to the conditions described in sections 143 through 149. 

"monitored RETRIEVABLE storage commission 

42 use 10163. "Sec. 143. (a) Establishment.— (1)( A) There is established a Mon- 

itored Retrievable Storage Review Commission (hereinafter in this 
section referred to as the 'MRS Commission'), that shall consist of 3 
members who shall be appointed by and serve at the pleasure of the 
President pro tempore of the Senate and the Speaker of the House of 
Representatives. 

"(B) "^^ Members of the MRS Commission shall be appointed not 
later than 30 days after the date of the enactment of the Nuclear 
Waste Policy Amendments Act of 1987 from among persons who as a 
result of training, experience and attainments are exceptionally 
well qualified to evaluate the need for a monitored retrievable 
storage facility as a part of the Nation's nuclear waste management 
system. 

Reports. "(C) The MRS Commission shall prepare a report on the need for a 

monitored retrievable storage facility as a part of a national nuclear 
waste management system that achieves the purposes of this Act. In 
preparing the report under this subparagraph, the MRS Commis- 
sion shall— 

"(i) review the status and adequacy of the Secretary's evalua- 
tion of the systems advantages and disadvantages of bringing 
such a facility into the national nuclear waste disposal system; 

"(ii) obtain comment and available data on monitored retriev- 
able storage from affected parties, including States containing 
potentially acceptable sites; 

"(iii) evaluate the utility of a monitored retrievable storage 
facility from a technical perspective; and 



Copy read "C of Nuclear", 
Copy read " "(BMi)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-233 

"(iv) make a recommendation to Congress as to whether such 
a facility should be included in the national nuclear waste 
management system in order to achieve the purposes of this 
Act, including meeting needs for packaging and handling of 
spent nuclear fuel, improving the flexibility of the repository 
development schedule, and providing temporary storage of 
spent nuclear fuel accepted for disposal. 
"(2) In preparing the report and making its recommendation 
under paragraph (1) the MRS Commission shall compare such a 
facility to the alternative of at-reactor storage of spent nuclear fuel 
prior to disposal of such fuel in a repository under this Act. Such 
comparison shall take into consideration the impact on— 
''(A) repository design and construction; 

**(B) waste package design, fabrication and standardization; 

"(C) waste preparation; 

"(D) waste transportation systems; 

"(E) the reliability of the national system for the disposal of 
radioactive waste; 

"(F) the ability of the Secretary to fulfill contractual commit- 
ments of the Department under this Act to accept spent nuclear 
fuel for disposal; and 

"(G) economic factors, including the impact on the costs likely 
to be imposed on ratepayers of the Nation's electric utilities for 
temporary at-reactor storage of spent nuclear fuel prior to final 
disposal in a repository, as well as the costs likely to be imposed 
on ratepayers of the Nation's electric utilities in building and 
operating such a facility. 
"(8) The report under this subsection, together with the rec- Reports, 
ommendation of the MRS Commission, shall be transmitted to 
Congress on June 1, 1989. 

"(4)(A)(i) Each member of the MRS Commission shall be paid at 
the rate provided for level III of the Executive Schedule for each day 
(including travel time) such member is engaged in the work of the 
MRS Commission, and shall receive travel expenses, including per 
diem in lieu of subsistence in the same manner as is permitted 
under sections 5702 and 5703 of title 5, United States Code. 

"(ii) The MRS Commission may appoint and fix compensation, not 
to exceed the rate of basic pay payable for OS- 18 of the General 
Schedule, for such staff as may be necessary to carry out its 
functions. 

"(B)(i) The MRS Commission may hold hearings, sit and act at 
such times and places, take such testimony and receive such evi- 
dence as the MRS Commission considers appropriate. Any member 
of the MRS Commission may administer oaths or affirmations to 
witnesses appearing before the MRS Commission. 

"(ii) The MRS Commission may request any Executive agency, 
including the Department, to furnish such assistance or informa- 
tion, including records, data, files, or documents, as the Commission 
considers necessary to carry out its functions. Unless prohibited by 
law, such agency shall promptly furnish such assistance or 
information. 

"(iii) To the extent permitted by law, the Administrator of the 
General Services Administration shall, upon request of the MRS 
Commission, provide the MRS Commission with necessary adminis- 
trative services, facilities, and support on a reimbursable basis. 

"(iv) The MRS Commission may procure temporary and intermit- 
tent services from experts and consultants to the same extent as is 



101 STAT. 1330-234 PUBLIC LAW 100-203— DEC. 22, 1987 



authorized by section 3109(b) of title 5, United States Code, at rates 
and under such rules as the MRS Commission considers reasonable. 

"(C) The MRS Commission shall cease to exist 60 days after the 
submission to Congress of the report required under this subsection. 

"survey 

42 use 10164. "Sec. 144. After the MRS Commission submits its report to the 
Congress under section 143, the Secretary may conduct a survey and 
evaluation of potentially suitable sites for a monitored retrievable 
storage facility. In conducting such survey and evaluation, the 
Secretary shall consider the extent to which siting a monitored 
retrievable storage facility at each site surveyed would — 

"(1) enhance the reliability and flexibility of the system for 
the disposal of spent nuclear fuel and high-level radioactive 
waste established under this Act; 

"(2) minimize the impacts of transportation and handling of 
such fuel and waste; 

"(3) provide for public confidence in the ability of such system 
to safely dispose of the fuel and waste; 

"(4) impose minimal adverse effects on the local community 
and the local environment; 

"(5) provide a high probability that the facility will meet 
applicable environmental, health, and safety requirements in a 
timely fashion; 

"(6) provide such other benefits to the system for the disposal 
of spent nuclear fuel and high-level radioactive waste as the 
Secretary deems appropriate; and 

"(7) unduly burden a State in which significant volumes of 
high-level radioactive waste resulting from atomic energy 
defense activities are stored. 

"site selection 

42 use 10165. "Sec. 145. (a) In General. — The Secretary may select the site 
evaluated under section 144 that the Secretary determines on the 
basis of available information to be the most suitable for a mon- 
itored retrievable storage facility that is an integral part of the 
system for the disposal of spent nuclear fuel and high-level radio- 
active waste established under this Act. 

"(b) Limitation. — The Secretary may not select a site under 
subsection (a) until the Secretary recommends to the President the 
approval of a site for development as a repository under section 
114(a). 

"(c) Site Specific Activities. — The Secretary may conduct such 
site specific activities at each site surveyed under section 144 as he 
determines may be necessary to support an application to the 
Commission for a license to construct a monitored retrievable stor- 
age facility at such site. 

"(d) Environmental Assessment. — Site specific activities and 
selection of a site under this section shall not require the prepara- 
tion of an environmental impact statement under section 102(2)(C) 
of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)). The Secretary shall prepare an environmental assess- 
ment with respect to such selection in accordance with regulations 
issued by the Secretary implementing such Act. Such environmental 
assessment shall be based upon available information regarding 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-235 



ij alternative technologies for the storage of spent nuclear fuel and 
.; high-level radioactive waste. The Secretary shall submit such 
jij environmental assessment to the Congress at the time such site is 
selected. 

"(e) Notification Before Selection.— (1) At least 6 months 
I before selecting a site under subsection (a), the Secretary shall 
. notify the Governor and legislature of the State in which such site is 
' located, or the governing body of the affected Indian tribe where 
' such site is located, as the case may be, of such potential selection 
and the basis for such selection. 

"(2) Before selecting any site under subsection (a), the Secretary 
shall hold at least one public hearing in the vicinity of such site to 
solicit any recommendations of interested parties with respect to 
issues raised by the selection of such site. 
"(f) Notification of Selection.— The Secretary shall promptly 
jtj notify Congress and the appropriate State or Indian tribe of the 
' selection under subsection (a). 

"(g) Limitation. — No monitored retrievable storage facility au- 
I thorized pursuant to section 142(b) may be constructed in the State 
|i of Nevada. 

"notice of disapproval 

j "Sec. 146. (a) In General.— The selection of a site under section 42 USC 10166. 

I 145 shall be effective at the end of the period of 60 calendar days 
beginning on the date of notification under such subsection, unless 
the governing body of the Indian tribe on whose reservation such 
site is located, or, if the site is not on a reservation, the Governor 
and the legislature of the State in which the site is located, has 

I I submitted to Congress a notice of disapproval with respect to such 
site. If any such notice of disapproval has been submitted under this 
subsection, the selection of the site under section 145 shall not be 
effective except as provided under section 115(c). 

"(b) References. — For purposes of carrying out the provisions of 
this subsection, references in section 115(c) to a repository shall be 
considered to refer to a monitored retrievable storage facility and 
references to a notice of disapproval of a repository site designation 
under section 116(b) or 118(a) shall be considered to refer to a notice 
of disapproval under this section. 

"benefits agreement 

jj "Sec. 147. Once selection of a site for a monitored retrievable 42 USC 10167. 

j( storage facility is made by the Secretary under section 145, the 
Indian tribe on whose reservation the site is located, or, in the case 
that the site is not located on a reservation, the State in which the 
site is located, shall be eligible to enter into a benefits agreement 

I with the Secretary under section 170. 

t "construction authorization 

I 

"Sec. 148. (a) Environmental Impact Statement.— (1) Once the 42 use 10168. 
selection of a site is effective under section 146, the requirements of 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.) shall apply with respect to construction of a monitored retriev- 
able storage facility, except that any environmental impact state- 
ment prepared with respect to such facility shall not be required to 

i, 

I 



101 STAT. 1330-236 PUBLIC LAW 100-203— DEC. 22, 1987 



consider the need for such facility or any alternative to the design 
criteria for such facility set forth in section 141(b)(1). 

"(2) Nothing in this section shall be construed to limit the consid- 
eration of alternative facility designs consistent with the criteria 
described in section 1410b)(l) in any environmental impact state- 
ment, or in any licensing procedure of the Commission, with respect 
to any monitored retrievable storage facility authorized under 
section 142(b). 

"(b) Application for Construction License.— Once the selection 
of a site for a monitored retrievable storage facility is effective 
under section 146, the Secretary may submit an application to the 
Commission for a license to construct such a facility as part of an 
integrated nuclear waste management system and in accordance 
with the provisions of this section and applicable agreements under 
this Act affecting such facility. 

"(c) Licensing. — Any monitored retrievable storage facility au- 
thorized pursuant to section 142(b) shall be subject to licensing 
under section 202(3) of the Energy Reorganization Act of 1974 (42 
U.S.C. 5842(3)). In reviewing the application filed by the Secretary 
for licensing of such facility, the Commission may not consider the 
need for such facility or any alternative to the design criteria for 
such facility set forth in section 141(b)(1). 

"(d) Licensing Conditions. — Any license issued by the Commis- 
sion for a monitored retrievable storage facility under this section 
shall provide that — 

"(1) construction of such facility may not begin until the 
Commission has issued a license for the construction of a reposi- 
tory under section 115(d); 

"(2) construction of such facility or acceptance of spent nu- 
clear fuel or high-level radioactive waste shall be prohibited 
during such time as the repository license is revoked by the 
Commission or construction of the repository ceases; 

"(3) the quantity of spent nuclear fuel or high-level radio- 
active waste at the site of such facility at any one time may not 
exceed 10,000 metric tons of heavy metal until a repository 
under this Act first accepts spent nuclear fuel or solidified high- 
level radioactive waste; and 

"(4) the quantity of spent nuclear fuel or high-level radio- 
active waste at the site of such facility at any one time may not 
exceed 15,000 metric tons of heavy metal. 

"financial assistance 

42 use 10169. "Sec. 149. The provisions of section 116(c) or 118(b) with respect to 

grants, technical assistance, and other financial assistance shall 
apply to the State, to affected Indian tribes and to affected units of 
local government in the case of a monitored retrievable storage 
facility in the same manner as for a repository.". 

PART C— BENEFITS 

SEC. 5031. BENEFITS. 

Title I of the Nuclear Waste Policy Act of 1982 is further amended 
by adding at the end the following new subtitles: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-237 



"Subtitle F — Benefits 
"benefits agreements 

j "Sec. 170. (a) In General. — (1) The Secretary may enter into a 42 USC 10173. 

'! benefits agreement with the State of Nevada concerning a reposi- 
tory or with a State or an Indian tribe concerning a monitored 
retrievable storage facility for the acceptance of high-level radio- 

I active waste or spent nuclear fuel in that State or on the reservation 
of that tribe, as appropriate. 

"(2) The State or Indian tribe may enter into such an agreement 
only if the State Attorney General or the appropriate governing 

I authority of the Indian tribe or the Secretary of the Interior, in the 

II absence of an appropriate governing authority, as appropriate, cer- 
! tifles to the satisfaction of the Secretary that the laws of the State or 
: Indian tribe provide adequate authority for that entity to enter into 
r the benefits agreement. 

ll "(3) Any benefits agreement with a State under this section shall 
' be negotiated in consultation with affected units of local govern- 
ment in such State. 

"(4) Benefits and payments under this subtitle may be made 
[ available only in accordance with a benefits agreement under this 
ll section. 

"(b) Amendment. — A benefits agreement entered into under 
subsection (a) may be amended only by the mutual consent of the 
parties to the agreement and terminated only in accordance with 
section 173. 

"(c) Agreement With Nevada.— The Secretary shall offer to 
i enter into a benefits agreement with the Governor of Nevada. Any 
j benefits agreement with a State under this subsection shall be 
Ijj negotiated in consultation with any affected units of local govern- 
|ij ment in such State. 

I "(d) Monitored Retrievable Storage. — The Secretary shall offer 
!' to enter into a benefits agreement relating to a monitored retriev- 
r able storage facility with the governing body of the Indian tribe on 
r whose reservation the site for such facility is located, or, if the site is 

I I not located on a reservation, with the Governor of the State in 

' which the site is located and in consultation with affected units of 
; local government in such State. 

i"(e) Limitation. — Only one benefits agreement for a repository 
and only one benefits agreement for a monitored retrievable storage 
facility may be in effect at any one time. 
"(f) Judicial Review. — Decisions of the Secretary under this sec- 
tion are not subject to judicial review. 

"content of agreements 

I "Sec. 171. (a) In General.— (1) In addition to the benefits to which 42 USC 10173a. 

I a State, an affected unit of local government or Indian tribe is 
entitled under title I, the Secretary shall make payments to a State 
or Indian tribe that is a party to a benefits agreement under section 
170 in accordance with the following schedule: 



101 STAT. 1330-238 PUBLIC LAW 100-203— DEC. 22, 1987 



"BENEFITS SCHEDULE 
(amounts in $ millions) 

Event MRS Repository 

(A) Annual payments prior to first spent fuel receipt 5 10 

(B) Upon first spent fuel receipt 10 20 

(C) Annual payments after first spent fuel receipt until closure 

of the facility 10 20 

"(2) For purposes of this section, the term — 

"(A) 'MRS' means a monitored retrievable storage facility, 
"(B) 'spent fuel' means high-level radioactive waste or spent 
nuclear fuel, and 

"(C) 'first spent fuel receipt' does not include receipt of spent 
fuel or high-level radioactive waste for purposes of testing or 
operational demonstration. 

"(3) Annual payments prior to first spent fuel receipt under 
paragraph (1)(A) shall be made on the date of execution of the 
benefits agreement and thereafter on the anniversary date of such 
execution. Annual payments after the first spent fuel receipt until 
closure of the facility under paragraph (1)(C) shall be made on the 
anniversary date of such first spent fuel receipt. 

"(4) If the first spent fuel payment under paragraph (1)(B) is made 
within six months after the last annual payment prior to the receipt 
of spent fuel under paragraph (1)(A), such first spent fuel payment 
under paragraph (1)(B) shall be reduced by an amount equal to one- 
twelfth of such annual payment under paragraph (1)(A) for each full j 
month less than six that has not elapsed since the last annual 
payment under paragraph (1)(A). 

"(5) Notwithstanding paragraph (1), (2), or (3), no payment under | 
this section may be made before January 1, 1989, and any payment j 
due under this title before January 1, 1989, shall be made on or after j 
such date. ' 

"(6) Except as provided in paragraph (7), the Secretary may not j 
restrict the purposes for which the payments under this section may I 
be used. ! 

"(7)(A) Any State receiving a payment under this section shall 
transfer an amount equal to not less than one-third of the amount of 
such payment to affected units of local government of such State. 

"(B) A plan for this transfer and appropriate allocation of such 
portion among such governments shall be included in the benefits 
agreement under section 170 covering such payments. 

"(C) In the event of a dispute concerning such plan, the Secretary 
shall resolve such dispute, consistent with this Act and applicable 
State law. 

"(b) Contents. — A benefits agreement under section 170 shall 
provide that — 

"(1) a Review Panel be established in accordance with section 
172; 

"(2) the State or Indian tribe that is party to such agreement 
waive its rights under title I to disapprove the recommendation , 
of a site for a repository; i 

"(3) the parties to the agreement shall share with one another 
information relevant to the licensing process for the repository . 
or monitored retrievable storage facility, as it becomes avail- j 
able; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-239 



"(4) the State or Indian tribe that is party to such agreement 
participate in the design of the repository or monitored retriev- 
I able storage facility and in the preparation of documents re- 
I quired under law or regulation governing the effects of the 
' facility on the public health and safety; and 

"(5) the State or Indian tribe waive its rights, if any, to impact 
assistance under sections 116(cXlXB)(ii), 116(c)(2), 118(b)(2)(A)(ii), 
and 118(b)(3). 

"(c) The Secretary shall make payments to the States or affected 
Indian tribes under a benefits agreement under this section from 
the Waste Fund. The signature of the Secretary on a valid benefits 
agreement under section 170 shall constitute a commitment by 
the United States to make payments in accordance with such 
agreement. 
I "review panel 

j| "Sec. 172. (a) In General.— The Review Panel required to be 42 USC 10173b. 
}; established by section 171(b)(1) of this Act shall consist of a Chair- 
1 man selected by the Secretary in consultation with the Governor of 
j the State or governing body of the Indian tribe, as appropriate, that 
i is party to such agreement and 6 other members as follows: 

"(1) 2 members selected by the Governor of such State or 
governing body of such Indian tribe; 

"(2) 2 members selected by units of local government affected 
by the repository or monitored retrievable storage facility; 

"(3) 1 member to represent persons making payments into the 
Waste Fund, to be selected by the Secretary; and 
j "(4) 1 member to represent other public interests, to be 

j! selected by the Secretary. 

ji "(b) Terms. — (1) The members of the Review Panel shall serve for 
I ; terms of 4 years each. 

jl; "(2) Members of the Review Panel who are not full-time em- 
|l ployees of the Federal Government, shall receive a per diem com- 
pensation for each day spent conducting work of the Review Panel, 
including their necessary travel or other expenses while engaged in 
ij the work of the Review Panel. 

I "(3) Expenses of the Panel shall be paid by the Secretary from the 
j Waste Fund. 

I "(c) Duties.— The Review Panel shall— 

I "(1) advise the Secretary on matters relating to the proposed 

V repository or monitored retrievable storage facility, including 
issues relating to design, construction, operation, and decommis- 
j sioning of the facility; 

"(2) evaluate performance of the repository or monitored 
retrievable storage facility, as it considers appropriate; 
"(3) recommend corrective actions to the Secretary; 
I "(4) assist in the presentation of State or affected Indian tribe 

and local perspectives to the Secretary; and 
j "(5) participate in the planning for and the review of 

preoperational data on environmental, demographic, and socio- 
il economic conditions of the site and the local community. 

"(d) Information. — The Secretary shall promptly make available 
promptly any information in the Secretary's possession reouested by 
' the Panel or its Chairman. 

"(e) Federal Advisory Committee Act. — The requirements of the 
Federal Advisory Committee Act shall not apply to a Review Panel 
established under this title. 



101 STAT. 1330-240 PUBLIC LAW 100-203— DEC. 22, 1987 



"termination 

42 use 10173c. "Sec. 173. (a) In General.— The Secretary may terminate a bene- 
fits agreement under this title if — 

"(1) the site under consideration is disqualified for its failure 
to comply with guidelines and technical requirements estab- 
lished by the Secretary in accordance with this Act; or 

"(2) the Secretary determines that the Commission cannot 
license the facility within a reasonable time. 
"(b) Termination by State or Indian Tribe. — A State or Indian 
tribe may terminate a benefits agreement under this title only if the 
Secretary disqualifies the site under consideration for its failure to 
comply with technical requirements established by the Secretary in 
accordance with this Act or the Secretary determines that the 
Commission cannot license the facility within a reasonable time. 

"(c) Decisions of the Secretary.— Decisions of the Secretary 
under this section shall be in writing, shall be available to Congress 
and the public, and are not subject to judicial review. 

"Subtitle G — Other Benefits 
"consideration in siting facilities I 

42 use 10174. "Sec. 174. The Secretary, in siting Federal research projects, shall I 
give special consideration to proposals from States where a reposi- 
tory is located. 

"report j, 

42 use 10174a. "Sec. 175. (a) In GENERAL.— Within one year of the date of the i 
enactment of the Nuclear Waste Policy Amendments Act of 1987, ■ 
the Secretary shall report to Congress on the potential impacts of 
locating a repository at the Yucca Mountain site, including the 
recommendations of the Secretary for mitigation of such impacts i 
and a statement of which impacts should be dealt with by the i 
Federal Government, which should be dealt with by the State with j; 
State resources, including the benefits payments under section 171, | 
and which should be a joint Federal-State responsibility. The report j 
under this subsection shall include the analysis of the Secretary of j 
the authorities available to mitigate these impacts and the appro- 
priate sources of funds for such mitigation. e 
"(b) Impacts To Be "^^ Considered. — Potential impacts to be ad- \'t 
dressed in the report under this subsection (a) shall include impacts 
on — 

"(1) education, including facilities and personnel for ele- 
mentary and secondary schools, community colleges, vocational 
and technical schools and universities; 

"(2) public health, including the facilities and personnel for 
treatment and distribution of water, the treatment of sewage, 
the control of pests and the disposal of solid waste; 

"(3) law enforcement, including facilities and personnel for 
the courts, police and sheriff s departments, district attorneys 
and public defenders and prisons; 

"(4) fire protection, including personnel, the construction of 
? fire stations, and the acquisition of equipment; 

"(5) medical care, including emergency services and hospitals; 



Copy read "to Be" 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-241 



"(6) cultural and recreational needs, including facilities and 
personnel for libraries and museums and the acquisition and 
expansion of parks; 

"(7) distribution of public lands to allow for the timely expan- 
sion of existing, or creation of new, communities and the 
construction of necessary residential and commercial facilities; 

"(8) vocational training and employment services; 

"(9) social services, including public assistance programs, 
vocational and physical rehabilitation programs, mental health 
services, and programs relating to the abuse of alcohol and 
controlled substances; 

"(10) transportation, including any roads, terminals, airports, 
bridges, or railways associated with the facility and the repair 
and maintenance of roads, terminals, airports, bridges, or rail- 
ways damaged as a result of the construction, operation, and 
closure of the facility; 

"(11) equipment and training for State and local personnel in 
the management of accidents involving high-level radioactive 
waste; 

"(12) availability of energy; 

"(13) tourism and economic development, including the poten- 
tial loss of revenue and future economic growth; and 

"(14) other needs of the State and local governments that 
would not have arisen but for the characterization of the site 
and the construction, operation, and eventual closure of the 
repository facility.". 

SEC. 50.32. PARTICIPATION OF STATES. 

(a) Financial Assistance. — Section 116(c) of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10136(c)) is amended to read as follows: 

"(c) Financial Assistance. — (IXA) The Secretary shall make 
grants to the State of Nevada and any affected unit of local govern- 
ment for the purpose of participating in activities required by this 
section and section 117 or authorized by written agreement entered 
into pursuant to section 117(c). Any salary or travel expense that 
would ordinarily be incurred by such State or affected unit of local 
government, may not be considered eligible for funding under this 
paragraph. 

"(B) The Secretary shall make grants to the State of Nevada and Grants, 
any affected unit of local government for purposes of enabling such 
State or affected unit of local government — 

"(i) to review activities taken under this subtitle with respect 
to the Yucca Mountain site for purposes of determining any 
potential economic, social, public health and safety, and 
environmental impacts of a repository on such State, or affected 
unit of local government and its residents; 

"(ii) to develop a request for impact assistance under para- 
graph (2); 

"(iii) to engage in any monitoring, testing, or evaluation 
activities with respect to site characterization programs with 
regard to such site; 

"(iv) to provide information to Nevada residents regarding 
any activities of such State, the Secretary, or the Commission 
with respect to such site; and 

"(v) to request information from, and make comments and 
recommendations to, the Secretary regarding any activities 
taken under this subtitle with respect to such site. 



101 STAT. 1330-242 PUBLIC LAW 100-203— DEC. 22, 1987 



"(C) Any salary or travel expense that would ordinarily be in- 
curred by the State of Nevada or any affected unit of local govern- 
ment may not be considered eligible for funding under this para- 
graph. 

''(2)(A)(i) The Secretary shall provide financial and technical 
assistance to the State of Nevada, and any affected unit of local 
government requesting such assistance. 

"(ii) Such assistance shall be designed to mitigate the impact on 
such State or affected unit of local government of the development 
of such repository and the characterization of such site. 

"(iii) Such assistance to such State or affected unit of local govern- 
ment of such State shall commence upon the initiation of site 
characterization activities. 
Reports. "(B) The State of Nevada and any affected unit of local govern- 

ment may request assistance under this subsection by preparing and 
submitting to the Secretary a report on the economic, social, public 
health and safety, and environmental impacts that are likely to 
result from site characterization activities at the Yucca Mountain 
site. Such report shall be submitted to the Secretary after the 
Secretary has submitted to the State a general plan for site 
characterization activities under section 113(b). 

"(C) As soon as practicable after the Secretary has submitted such 
site characterization plan, the Secretary shall seek to enter into a 
binding agreement with the State of Nevada setting forth — 

"(i) the amount of assistance to be provided under this subsec- 
tion to such State or affected unit of local government; and 
"(ii) the procedures to be followed in providing such 
assistance. 

Grants. "(3)(A) In addition to financial assistance provided under para- 

graphs (1) and (2), the Secretary shall grant to the State of Nevada 
and any affected unit of local government an amount each fiscal 
year equal to the amount such State or affected unit of local 
government, respectively, would receive if authorized to tax site 
characterization activities at such site, and the development and 
operation of such repository, as such State or affected unit of local 
government taxes the non-Federal real property and industrial 
activities occurring within such State or affected unit of local 
government. 

"(B) Such grants shall continue until such time as all such activi- 
ties, development, and operation are terminated at such site. 
Grants. "(4)(A) The State of Nevada or any affected unit of local govern- 

ment may not receive any grant under paragraph (1) after the 
expiration of the 1-year period following — 

"(i) the date on which the Secretary notifies the Governor and 
legislature of the State of Nevada of the termination of site 
characterization activities at the site in such State; 

"(ii) the date on which the Yucca Mountain site is dis- 
approved under section 115; or 

"(iii) the date on which the Commission disapproves an ap- 
plication for a construction authorization for a repository at 
such site; 
whichever occurs first. 

"(B) The State of Nevada or any affected unit of local government 
- may not receive any further assistance under paragraph (2) with 
respect to a site if repository construction activities or site 
characterization activities at such site are terminated by the Sec- 
retary or if such activities are permanently enjoined by any court. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-243 



"(C) At the end of the 2-year period beginning on the effective date 
of any license to receive and possess for a repository in a State, no 
Federal funds, shall be made available to such State or affected unit 
of local government under paragraph (1) or (2), except for — 

"(i) such funds as may be necessary to support activities 
related to any other repository located in, or proposed to be 
located in, such State, and for which a license to receive and 
possess has not been in effect for more than 1 year; , 

"(ii) such funds as may be necessary to support State activi- 
ties pursuant to agreements or contracts for impact assistance 
entered into, under paragraph (2), by such State with the Sec- 
retary during such 2-year period; and 

"(iii) such funds as may be provided under an agreement 
entered into under title IV. 
"(5) Financial assistance authorized in this subsection shall be 
made out of amounts held in the Waste Fund. 

"(6) No State, other than the State of Nevada, may receive 
financial assistance under this subsection after the date of the 
enactment of the Nuclear Waste Policy Amendments Act of 1987.". 

SEC. 5033. PARTICIPATION OF INDIAN TRIBES. 

Section 118(b)(5) of the Nuclear Waste Policy Act of 1982 (42 
U.S.C. 10138(b)(5)) is amended by— 

(1) striking "or" at the end of clause (ii); and . 

(2) adding at the end the following new clause: 

"(iv) the date of the enactment of the Nuclear Waste Policy 
Amendments Act of 1987;". 

PART D— NUCLEAR WASTE NEGOTIATOR 

SEC. 5041. NUCLEAR WASTE NEGOTIATOR. 

The Nuclear Waste Policy Act of 1982 is amended by adding at the 
end the following new title: 

"TITLE IV— NUCLEAR WASTE NEGOTIATOR 
"definition 

"Sec. 401. For purposes of this title, the term 'State' means each 42 USC 10241. 
of the several States, the District of Columbia, the Commonwealth of 
Puerto Rico, the Virgin Islands, Guam, American Samoa, the North- 
ern Mariana Islands, the Trust Territory of the Pacific Islands, any 
other territory or possession of the United States, and the Republic 
of the Marshall Islands. 

"the office of THE NUCLEAR WASTE NEGOTIATOR 

"Sec. 402. (a) Estabushment.— There is established within the 42 USC 10242. 
Executive Office of the President the Office of the Nuclear Waste 
Negotiator. 

"(b) The Nuclear Waste Negotiator.— (1) The Office shall be President of U.S. 
headed by a Nuclear Waste Negotiator who shall be appointed by 
the President, by and with the advice and consent of the Senate. The 
Negotiator shall hold office at the pleasure of the President, and 
shall be compensated at the rate provided for level III of the 
Executive Schedule in section 5314 of title 5, United States Code. 



101 STAT. 1330-244 PUBLIC LAW 100-203— DEC. 22, 1987 



"(2) The Negotiator shall attempt to find a State or Indian tribe 
willing to host a repository or monitored retrievable storage facility 
at a technically qualified site on reasonable terms and shall nego- 
tiate with any State or Indian tribe which expresses an interest in 
hosting a repository or monitored retrievable storage facility. 

"duties of the negotiator 

42 use 10243. "Sec. 403. (a) Negotiations With Potential Hosts. — (1) The 
Negotiator shall — 

"(A) seek to enter into negotiations on behalf of the United 
States, with — 

"(i) the Governor of any State in which a potential site is 
located; and 

"(ii) the governing body of any Indian tribe on whose 
reservation a potential site is located; and 
"(B) attempt to reach a proposed agreement between the 
United States and any such State or Indian tribe specifying the 
terms and conditions under which such State or tribe would 
agree to host a repository or monitored retrievable storage 
facility within such State or reservation. 
"(2) In any case in which State law authorizes any person or entity 
other than the Governor to negotiate a proposed agreement under 
this section on behalf of the State, any reference in this title to the 
Governor shall be considered to refer instead to such other person or 
entity. 

Consultation With Affected States, Subdivisions of 
States, and Tribes. — In addition to entering into negotiations under 
subsection (a), the Negotiator shall consult with any State, affected 
unit of local government, or any Indian tribe that the Negotiator 
determines may be affected by the siting of a repository or mon- 
itored retrievable storage facility and may include in any proposed 
agreement such terms and conditions relating to the interest of such 
States, affected units of local government, or Indian tribes as the 
Negotiator determines to be reasonable and appropriate. 

"(c) Consultation With Other Federal Agencies. — The Nego- 
tiator may solicit and consider the comments of the Secretary, the 
Nuclear Regulatory Commission, or any other Federal agency on 
the suitability of any potential site for site characterization. Nothing 
in this subsection shall be construed to require the Secretary, the 
Nuclear Regulatory Commission, or any other Federal agency to 
make a finding that any such site is suitable for site characteriza- I 
tion. 

"(d) Proposed Agreement. — (1) The Negotiator shall submit to , 
the Congress any proposed agreement between the United States 
and a State or Indian tribe negotiated under subsection (a) and an 
environmental assessment prepared under section 404(a) for the site 
concerned. 

"(2) Any such proposed agreement shall contain such terms and 
conditions (including such financial and institutional arrangements) 
as the Negotiator and the host State or Indian tribe determine to be 
reasonable and appropriate and shall contain such provisions as are 
necessary to preserve any right to participation or compensation of 
such State, affected unit of local government, or Indian tribe under 
sections 116(c), 117, and 118(b). 

"(3XA) No proposed agreement entered into under this section 
shall have legal effect unless enacted into Federal law. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-245 



"(B) A State or Indian tribe shall enter into an agreement under 
this section in accordance with the laws of such State or tribe 
Nothing in this section may be construed to prohibit the disapproval 
of a proposed agreement between a State and the United States 
under this section by a referendum or an act of the legislature of 
such State. 

"(4) Notwithstanding any proposed agreement under this section, 
the Secretary may construct a repository or monitored retrievable 
storage facility at a site agreed to under this title only if authorized 
by the Nuclear Regulatory Commission in accordance with the 
Atomic Energy Act of 1954 (42 U.S.C. 2012 et seq.), title II of the 
Energy Reorganization Act of 1982 (42 U.S.C. 5841 et seq.) and any 
other law applicable to authorization of such construction. 



I "Sec. 404. (a) In General.— Upon the request of the Negotiator, 42 USC 10244. 

I I the Secretary shall prepare an environmental assessment of any site 
that is the subject of negotiations under section 403(a). 

"(b) Contents. — (1) Each environmental assessment prepared for 
i a repository site shall include a detailed statement of the probable 
i| impacts of characterizing such site and the construction and oper- 
I ation of a repository at such site. 

j "(2) Each environmental assessment prepared for a monitored 
I retrievable storage facility site shall include a detailed statement of 
' the probable impacts of construction and operation of such a facility 
at such site. 

"(c) Judicial Review. — The issuance of an environmental assess- 
ment under subsection (a) shall be considered to be a final agency 
action subject to judicial review in accordance with the provisions of 

III chapter 7 of title 5, United States Code, and section 119. 

"(d) PuBUC Hearings. — (1) In preparing an environmental assess- 
ment for any repository or monitored retrievable storage facility 
site, the Secretary shall hold public hearings in the vicinity of such 
site to inform the residents of the area in which such site is located 
j., that such site is being considered and to receive their comments. 



f "(2) At such hearings, the Secretary shall solicit and receive any 
recommendations of such residents with respect to issues that 
should be addressed in the environmental assessment required 
I under subsection (a) and the site characterization plan described in 
! section 113(b)(1). 

"(e) PuBUC AvAiLABiUTY. — Each environmental assessment pre- 
pared under subsection (a) shall be made available to the public. 

"(f) Evaluation of Sites. — (1) In preparing an environmental 
assessment under subsection (a), the Secretary shall use available 
geophysical, geologic, geochemical and hydrologic, and other 
; information and shall not conduct any preliminary borings or exca- 
I vations at any site that is the subject of such assessment unless — 
"(A) such preliminary boring or excavation activities were in 
progress on or before the date of the enactment of the Nuclear 
Waste Policy Amendments Act of 1987 ; or 

"(B) the Secretary certifies that, in the absence of preliminary 
borings or excavations, adequate information will not be avail- 
able to satisfy the requirements of this Act or any other law. 
I "(2) No preliminary boring or excavation conducted under this 
' section shall exceed a diameter of 40 inches. 



environmental assessment of sites 



i 



101 STAT. 1330-246 PUBLIC LAW 100-203— DEC. 22, 1987 



"site characterization; licensing 

42 use 10245. "Sec. 405. (a) SiTE CHARACTERIZATION.— Upon enactment of legis- 
lation to implement an agreement to site a repository negotiated 
under section 403(a), the Secretary shall conduct appropriate site 
characterization activities for the site that is the subject of such i 
agreement subject to the conditions and terms of such agreement. 
Any such site characterization activities shall be conducted in 
accordance with section 113, except that references in such section 
to the Yucca Mountain site and the State of Nevada shall be deemed 
to refer to the site that is the subject of the agreement and the State 
or Indian tribe entering into the agreement. 

**(b) Licensing. — (1) Upon the completion of site characterization 
activities carried out under subsection (a), the Secretary shall 
submit to the Nuclear Regulatory Commission an application for 
construction authorization for a repository at such site. 

"(2) The Nuclear Regulatory Commission shall consider an ap- 
plication for a construction authorization for a repository or mon- 
itored retrievable storage facility in accordance with the laws 
applicable to such applications, except that the Nuclear Regulatory 
Commission shall issue a final decision approving or disapproving 
the issuance of a construction authorization not later than 3 years 
after the date of the submission of such application. 

"monitored RETRIEVABLE STORAGE I 

■ ' ■ j 

"Sec. 406. (a) Construction and Operation.— Upon enactment of 
legislation to implement an agreement negotiated under section 
403(a) to site a monitored retrievable storage facility, the Secretary 
shall construct and operate such facility as part of an integrated 
nuclear waste management system in accordance with the terms 
and conditions of such agreement. 

"(b) Financial Assistance. — The Secretary may make grants to 
any State, Indian tribe, or affected unit of local government to 
assess the feasibility of siting a monitored retrievable storage facil- 
ity under this section at a site under the jurisdiction of such State, 
tribe, or affected unit of local government. 

"environmental impact statement 

42 use 10247. "Sec. 407. (a) In General. — Issuance of a construction authoriza- 
tion for a repository or monitored retrievable storage facility under 
section 405(b) shall be considered a major Federal action signifi- 
cantly affecting the quality of the human environment for purposes 
of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.). 

"(b) Preparation. — A final environmental impact statement shall 
be prepared by the Secretary under such Act and shall accompany 
any application to the Nuclear Regulatory Commission for a 
construction authorization. i 

"(c) Adoption. — (1) Any such environmental impact statement 
shall, to the extent practicable, be adopted by the Nuclear Regu- , 
latory Commission, in accordance with section 1506.3 of title 40, 
Code of Federal Regulations, in connection with the issuance by the 
Nuclear Regulatory Commission of a construction authorization and 
license for such repository or monitored retrievable storage facility. 

"(2XA) In any such statement prepared with respect to a reposi- , 
tory to be constructed under this title at the Yucca Mountain site, I 



42 use 10246. 



Grants. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-247 



the Nuclear Regulatory Commission need not consider the need for 
a repository, the time of initial availability of a repository, alternate 
sites to the Yucca Mountain site, or nongeologic alternatives to such 
site. 

"(B) In any such statement prepared with respect to a repository 
to be constructed under this title at a site other than the Yucca 
Mountain site, the Nuclear Regulatory Commission need not con- 
sider the need for a repository, the time of initial availability of a 
repository, or nongeologic alternatives to such site but shall consider 
the Yucca Mountain site as an alternate to such site in the prepara- 
tion of such statement. 

"administrative powers of the negotiator 

"Sec. 408. In carrying out his functions under this title, the 42 USC 10248. 
Negotiator may— 

"(1) appoint such officers and employees as he determines to 
be necessary and prescribe their duties; 

"(2) obtain services as authorized by section 3109 of title 5, 
United States Code, at rates not to exceed the rate prescribed : 
for grade OS- 18 of the General Schedule by section 5332 of title 
5, United States Code; 

"(3) promulgate such rules and regulations as may be nec- 
essary to carry out such functions; 

"(4) utilize the services, personnel, and facilities of other 
Federal agencies (subject to the consent of the head of any such 
agency); 

"(5) for purposes of performing administrative functions Contracts, 
under this title, and to the extent funds are appropriated, enter 
into and perform such contracts, leases, cooperative agree- 
ments, or other transactions as may be necessary and on such 
terms as the Negotiator determines to be appropriate, with any 
agency or instrumentality of the United States, or with any 
public or private person or entity; 

"(6) accept voluntary and uncompensated services, notwith- 
standing the provisions of section 1342 of title 31, United States 
Code; 

"(7) adopt an official seal, which shall be judicially noticed; 

"(8) use the United States mails in the same manner and 
under the same conditions as other departments and agencies of 
the United States; 

"(9) hold such hearings as are necessary to determine the 
views of interested parties and the general public; and 

"(10) appoint advisory committees under the Federal Advisory 
Committee Act (5 U.S.C. App.). 

"cooperation of other departments and agencies 

"Sec. 409. Each department, agency, and instrumentality of the 42 USC 10249. 
United States, including any independent agency, may furnish the 
Negotiator such information as he determines to be necessary to 
carry out his functions under this title. 

"termination of the office 

"Sec. 410. The Office shall cease to exist not later than 30 days 42 USC 10250. 
after the date 5 years after the date of the enactment of the Nuclear 
Waste Policy Amendments Act of 1987. 



101 STAT. 1330-248 



PUBLIC LAW 100-203— DEC. 22, 1987 



AUTHORIZATION OF APPROPRIATIONS 

42 use 10251. "Sec. 411. Notwithstanding subsection (d) of section 302, and 
subject to subsection (e) of such section, there are authorized to be 
appropriated for expenditures from amounts in the Waste Fund 
established in subsection (c) of such section, such sums as may be 
necessary to carry out the provisions of this title.". 

PART E— NUCLEAR WASTE TECHNICAL REVIEW 

BOARD 

SEC. 5051. NUCLEAR WASTE TECHNICAL REVIEW BOARD. 

The Nuclear Waste Policy Act of 1982 (42 U.S.C. 10101 et seq.) is 
further amended by adding at the end the following new title: 

"TITLE V— NUCLEAR WASTE TECHNICAL REVIEW BOARD 

"definitions 

42 use 10261. "Sec. 501. As used in this title: 

"(1) The term 'Chairman' means the Chairman of the Nuclear 
Waste Technical Review Board. 

"(2) The term 'Board' means the Nuclear Waste Technical 
Review Board established under section 502. 



NUCLEAR WASTE TECHNICAL REVIEW BOARD 

42USC 10262. "Sec. 502. (a) Establishment.— There is established a Nuclear 
Waste Technical Review Board that shall be an independent 
establishment within the executive branch. 

President of U.S. "(b) MEMBERS.— (1) The Board shall consist of 11 members who 
shall be appointed by the President not later than 90 days after the 
date of the enactment of the Nuclear Waste Policy Amendments Act 
of 1987 from among persons nominated by the National Academy of 
Sciences in accordance with paragraph (3). 

President of U.S. "(2) The President shall designate a member of the Board to serve 
as chairman. 

"(3)(A) The National Academy of Sciences shall, not later than 90 
days after the date of the enactment of the Nuclear Waste Policy 
Amendments Act of 1987, nominate not less than 22 persons for 
appointment to the Board from among persons who meet the quali- 
fications described in subparagraph (C). 

"(B) The National Academy of Sciences shall nominate not less 
than 2 persons to fill any vacancy on the Board from among persons 
who meet the qualifications described in subparagraph (C). 

"(C)(i) Each person nominated for appointment to the Board shall 
be- 

"(I) eminent in a field of science or engineering, including 
environmental sciences; and 

"(II) selected solely on the basis of established records of 
distinguished service, 
"(ii) The membership of the Board shall be representative of the 
broad range of scientific and engineering disciplines related to 
activities under this title. 

"(iii) No person shall be nominated for appointment to the Board 
who is an employee of— 

"(I) the Department of Energy; 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-249 



"(II) a national laboratory under contract with the Depart- 
ment of Energy; or 

"(III) an entity performing high-level radioactive waste or 
spent nuclear fuel activities under contract with the Depart- 
ment of Energy. 

"(4) Any vacancy on the Board shall be filled by the nomination 
and appointment process described in paragraphs (1) and (3), 

"(5) Members of the Board shall be appointed for terms of 4 years, 
each such term to commence 120 days after the date of enactment of 
the Nuclear Waste Policy Amendments Act of 1987, except that of 
the 11 members first appointed to the Board, 5 shall serve for 2 
years and 6 shall serve for 4 years, to be designated by the President 
at the time of appointment. 

"functions 

"Sec. 503. The Board shall evaluate the technical and scientific 42 USC 10263. 
validity of activities undertaken by the Secretary after the date of 
the enactment of the Nuclear Waste Policy Amendments Act of 
1987, including— 

"(1) site characterization activities; and 

"(2) activities relating to the packaging or transportation of 
high-level radioactive waste or spent nuclear fuel. 

"investigatory powers 

"Sec. 504. (a) Hearings.— Upon request of the Chairman or a 42 USC 10264. 
majority of the members of the Board, the Board may hold such 
hearings, sit and act at such times and places, take such testimony, 
and receive such evidence, as the Board considers appropriate. Any 
member of the Board may administer oaths or affirmations to 
witnesses appearing before the Board. 

"(b) Production of Documents.— (1) Upon the request of the 
Chairman or a majority of the members of the Board, and subject to 
existing law, the Secretary (or any contractor of the Secretary) shall 
provide the Board with such records, files, papers, data, or informa- 
tion as may be necessary to respond to any inquiry of the Board 
under this title. 

I "(2) Subject to existing law, information obtainable under para- 
jij graph (1) shall not be limited to final work products of the Secretary, 
! ■ but shall include drafts of such products and documentation of work 
il in progress. 

"compensation of members 

j, "Sec. 505. (a) In General.— Each member of the Board shall be 42 USC 10265. 
' paid at the rate of pay payable for level III of the Executive 
t Schedule for each day (including travel time) such member is en- 
ii gaged in the work of the Board. 

Ij; "Ob) Travel Expenses. — Each member of the Board may receive 
travel expenses, including per diem in lieu of subsistence, in the 
same manner as is permitted under sections 5702 and 5703 of title 5, 
United States Code. 

"staff 

"Sec. 506. (a) Clerical Staff.— (1) Subject to paragraph (2), the 42 use 10266. 
Chairman may appoint and fix the compensation of such clerical 



101 STAT. 1330-250 PUBLIC LAW 100-203— DEC. 22, 1987 



staff as may be necessary to discharge the responsibilities of the 
Board. 

"(2) Clerical staff shall be appointed subject to the provisions of 
title 5, United States Code, governing appointments in the competi- 
tive service, and shall be paid in accordance with the provisions of 
chapter 51 and subchapter III of chapter 53 of such title relating to 
classification and General Schedule pay rates. 

"(b) Professional Staff. — (1) Subject to paragraphs (2) and (3), 
the Chairman may appoint and fix the compensation of such profes- 
sional staff as may be necessary to discharge the responsibilities of 
the Board. 

"(2) Not more than 10 professional staff members may be ap- 
pointed under this subsection. 

"(3) Professional staff members may be appointed without regard 
to the provisions of title 5, United States Code, governing appoint- 
ments in the competitive service, and may be paid without regard to 
' the provisions of chapter 51 and subchapter III of chapter 53 of such 

title relating to classification and General Schedule pay rates, 
except that no individual so appointed may receive pay in excess of 
the annual rate of basic pay payable for GS-18 of the General 
Schedule. 

"support services 

42 use 10267. "Sec. 507. (a) General Services.— To the extent permitted by law 
and requested by the Chairman, the Administrator of General 
Services shall provide the Board with necessary administrative 
services, facilities, and support on a reimbursable basis. 

"(b) Accounting, Research, and Technology Assessment Serv- 
ices. — The Comptroller General, the Librarian of Congress, and the 
Director of the Office of Technology Assessment shall, to the extent 
permitted by law and subject to the availability of funds, provide the 
Board with such facilities, support, funds and services, including 
staff, as may be necessary for the effective performance of the 
functions of the Board. 

"(c) Additional Support. — Upon the request of the Chairman, the 
Board may secure directly from the head of any department or 
agency of the United States information necessary to enable it to 
carry out this title. 

"(d) Mails. — The Board may use the United States mails in the 
same manner and under the same conditions as other departments 
and agencies of the United States. 

"(e) Experts and Consultants. — Subject to such rules as may be 
prescribed by the Board, the Chairman may procure temporary and 
intermittent services under section 3109(b) of title 5 of the United 
States Code, but at rates for individuals not to exceed the daily 
equivalent of the maximum annual rate of basic pay payable for 
GS-18 of the General Schedule. 

"report 

42 use 10268. "Sec. 508. The Board shall report not less than 2 times per year to 
Congress and the Secretary its findings, conclusions, and rec- 
' ommendations. The first such report shall be submitted not later 
than 12 months after the date of the enactment of the Nuclear 
Waste Policy Amendments Act of 1987. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-251 



"authorization of appropriations 



"Sec. 509. Notwithstanding subsection (d) of section 302, and 42 USC 10269. 
subject to subsection (e) of such section, there are authorized to be 
appropriated for expenditures from amounts in the Waste Fund 

1 1 established in subsection (c) of such section such sums as may be 

' necessary to carry out the provisions of this title. 



"termination of the board 



"Sec. 510. The Board shall cease to exist not later than 1 year 42 USC 10270. 
after the date on which the Secretary begins disposal of high-level 
radioactive waste or spent nuclear fuel in a repository.". 

PART F— MISCELLANEOUS 



SEC. .5061. TRANSPORTATION. 

Title I of the Nuclear Waste Policy Act of 1982 (42 U.S.C. 10121- 
10171) is further amended by adding at the end the following new 
subtitle: 

"Subtitle H — Transportation 



' 'transportation 



"Sec. 180. (a) No spent nuclear fuel or high-level radioactive waste 42 USC 10175. 
j may be transported by or for the Secretary under subtitle A or 
I'l under subtitle C except in packages that have been certified for such 
J purpose by the Commission. 

j "(b) The Secretary shall abide by regulations of the Commission 
( regarding advance notification of State and local governments prior 
to transportation of spent nuclear fuel or high-level radioactive 
jj waste under subtitle A or under subtitle C. 

1 "(c) The Secretary shall provide technical assistance and funds to 
States for training for public safety officials of appropriate units of 
local government and Indian tribes through whose jurisdiction the 
Secretary plans to transport spent nuclear fuel or high-level radio- 

(| active waste under subtitle A or under subtitle C. Training shall 

j' cover procedures required for safe routine transportation of these 
materials, as well as procedures for dealing with emergency re- 

! sponse situations. The Waste Fund shall be the source of funds for 

i,| work carried out under this subsection.". 

'I SEC. !>062. TRANSPORTATION OF PLUTONIUM BY AIRCRAFT THROUGH 42 USC 5841 
UNITED states AIR SPACE. note. 

(a) In General. — Notwithstanding any other provision of law, no 

I form of plutonium may be transported by aircraft through the air 
^ space of the United States from a foreign nation to a foreign nation 
ji unless the Nuclear Regulatory Commission has certified to Congress 

II that the container in which such plutonium is transported is safe, as 
I determined in accordance with subsection (b), the second undesig- 
' nated paragraph under section 201 of Public Law 94-79 (89 Stat. 413; 
I 42 U.S.C. 5841 note), and all other applicable laws. 

(b) Responsibilities of the Nuclear Regulatory Commission.— 

(1) Determination of safety.— The Nuclear Regulatory 
Commission shall determine whether the container referred to 
in subsection (a) is safe for use in the transportation of pluto- 
nium by aircraft and transmit to Congress a certification for the 



101 STAT. 1330-252 PUBLIC LAW 100-203— DEC. 22, 1987 



purposes of such subsection in the case of each container deter- 
mined to be safe. 

(2) Testing. — In order to make a determination with respect 
to a container under paragraph (1), the Nuclear Regulatory 
Commission shall — 

(A) require an actual drop test from maximum cruising 
altitude of a full-scale sample of such container loaded with 
test materials; and 

(B) require an actual crash test of a cargo aircraft fully 
loaded with full-scale samples of such container loaded with 
test material unless the Commission determines, after con- 
sultation with an independent scientific review panel, that 
the stresses on the container produced by other tests used 
in developing the container exceed the stresses which would 
occur during a worst case plutonium air shipment accident. 

(3) Limitation. — The Nuclear Regulatory Commission may 
not certify under this section that a container is safe for use in 
the transportation of plutonium by aircraft if the container 
ruptured or released its contents during testing conducted in 
accordance with paragraph (2). 

(4) Evaluation.— The Nuclear Regulatory Commission shall 
evaluate the container certification required by title II of the 
Energy Reorganization Act of 1974 (42 U.S.C. 5841 et seq.) and 

, f . subsection (a) in accordance with the National Environmental 

Policy Act of 1969 (83 Stat. 852; 42 U.S.C. 4321 et seq.) and all 
other applicable law. 

(c) Content of Certification.— A certification referred to in 
subsection (a) with respect to a container shall include — 

(1) the determination of the Nuclear Regulatory Commission 
as to the safety of such container; 

(2) a statement that the requirements of subsection (b)(2) were 
satisfied in the testing of such container; and 

(3) a statement that the container did not rupture or release 
its contents into the environment during testing. 

(d) Design of Testing Procedures.— The tests required by subsec- 
tion (b) shall be designed by the Nuclear Regulatory Commission to 
replicate actual worst case transportation conditions to the maxi- 
mum extent practicable. In designing such tests, the Commission 
shall provide for public notice of the proposed test procedures, 
provide a reasonable opportunity for public comment on such proce- 
dures, and consider such comments, if any. 

(e) Testing Results: Reports and Public Disclosure.— The Nu- 
clear Regulatory Commission shall transmit to Congress a report on 
the results of each test conducted under this section and shall make 
such results available to the public. 

President of U.S. (0 ALTERNATIVE RoUTES AND MeANS OF TRANSPORTATION.— With 

respect to any shipments of plutonium from a foreign nation to a 
foreign nation which are subject to United States consent rights 
contained in an Agreement for Peaceful Nuclear Cooperation, the 
President is authorized to make every effort to pursue and conclude 
arrangements for alternative routes and means of transportation, 
including sea shipment. All such arrangements shall be subject to 
stringent physical security conditions, and other conditions designed 



Copy read "full". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-253 



to protect the public health and safety, and provisions of this 

section, and all other applicable laws. 
I (g) Inappucability to Medical Devices. — Subsections (a) through 
' (e) shall not apply with respect to plutonium in any form contained 

in a medical device designed for individual human application, 
(h) Inapplicability to Miutary Uses. — Subsections (a) through 
I (e) shall not apply to plutonium in the form of nuclear weapons nor 
i to other shipments of plutonium determined by the Department of 

Energy to be directly connected with the United States national 

security or defense programs. 

I (i) Inapplicabiuty to Previously Certified Containers.— This 
section shall not apply to any containers for the shipment of pluto- 
nium previously certified as safe by the Nuclear Regulatory 
Commission under Public Law 94-79 (89 Stat. 413; 42 U.S.C. 5841 
note). 

(j) Payment of Costs. — All costs incurred by the Nuclear Regu- 
latory Commission associated with the testing program required by 
this section, and administrative costs related thereto, shall be re- 
imbursed to the Nuclear Regulatory Commission by any foreign 
country receiving plutonium shipped through United States air- 
space in containers specified by the Commission. 

SEC. 5063. SUBSEABED DISPOSAL. 

Title II of the Nuclear Waste Policy Act of 1982 (42 U.S.C 10191- 
i 10203) is amended by adding at the end the following new section: 

"subseabed disposal 

"Sec. 224. (a) Study.— Within 270 days after the date of the Reports, 
enactment of the Nuclear Waste Policy Amendments Act of 1987, 42 USC 10204. 
, the Secretary shall report to Congress on subseabed disposal of spent 
' nuclear fuel and high-level radioactive waste. The report under this 
I subsection shall include — 

"(1) an assessment of the current state of knowledge of 
subseabed disposal as an alternative technology for disposal of 
spent nuclear fuel and high-level radioactive waste; 
"(2) an estimate of the costs of subseabed disposal; 
"(3) an analysis of institutional factors associated with 
subseabed disposal, including international aspects of a decision 
of the United States to proceed with subseabed disposal as an 
option for nuclear waste management; 

"(4) a full discussion of the environmental and public health 
and safety aspects of subseabed disposal; 

"(5) recommendations on alternative ways to structure an 
effort in research, development, and demonstration with respect 
to subseabed disposal; and 

"(6) the recommendations of the Secretary with respect to 
research, development and demonstration in subseabed disposal 
of spent nuclear fuel and high-level radioactive waste. 
\ "0)) Office of Subseabed Disposal Research.— (1) There is Establishment, 
hereby established an Office of Subseabed Disposal Research within 
( the Office of Energy Research of the Department of Energy. The 
Office shall be headed by the Director, who shall be a member of the 
Senior Executive Service appointed by the Director of the Office of 
j Energy Research, and compensated at a rate determined by 
I applicable law. 



101 STAT. 1330-254 PUBLIC LAW 100-203— DEC. 22, 1987 



"(2) The Director of the Office of Subseabed Disposal Research 
shall be responsible for carrying out research, development, and 
demonstration activities on all aspects of subseabed disposal of high- 
level radioactive waste and spent nuclear fuel, subject to the general 
supervision of the Secretary. The Director of the Office shall be 
directly responsible to the Director of the Office of Energy Research, 
and the first such Director shall be appointed within 30 days of the 
date of enactment of the Nuclear Waste Policy Amendments Act of 
1987. 

"(3) In carrying out his responsibilities under this Act, the Sec- 
retary may make grants to, or enter into contracts with, the 
Subseabed Consortium described in subsection (d) of this section, 
and other persons. 

"(4)(A) Within 60 days of the date of enactment of the Nuclear 
Waste Policy Amendments Act of 1987, the Secretary shall establish 
a university-based Subseabed Consortium involving leading oceano- ; 
graphic universities and institutions, national laboratories, and 
other organizations to investigate the technical and institutional i 
feasibility of subseabed disposal. 

"(B) The Subseabed Consortium shall develop a research plan and ' 
budget to achieve the following objectives by 1995: ' 
"(i) demonstrate the capacity to identify and characterize' 
potential subseabed disposal sites; 

"(ii) develop conceptual designs for a subseabed disposal 
system, including estimated costs and institutional require- 
ments; and 

"(iii) identify and assess the potential impacts of subseabed i 
disposal on the human and marine environment. ; 
"(C) In 1990, and again in 1995, the Subseabed Consortium shall 
report to Congress on the progress being made in achieving the 
objectives of paragraph (2). 

"(5) The Director of the Office of Subseabed Disposal Research ' 
shall annually prepare and submit a report to the Congress on the 
activities and expenditures of the Office. 

SEC. 5604. DRY CASK STORAGE. 

(a) Study. — During the period between the date of the enactment J 
of the Nuclear Waste Policy Amendments Act of 1987 and October 1, ' 
1988, the Secretary of Energy (hereinafter in this section referred to 
as the "Secretary") shall conduct a study and evaluation of the use 
of dry cask storage technology at the sites of civilian nuclear power 
reactors for the temporary storage of spent nuclear fuel until such 
time as a permanent geologic repository has been constructed and „ 
licensed by the Nuclear Regulatory Commission (hereinafter in this ] 
section referred to as the "Commission") and is capable of receiving 

Reports. spent nuclear fuel. The Secretary shall report to Congress on the 

study under this paragraph by October 1, 1988. 

(b) Contents of Study. — In conducting the study under para- j 
graph (1) the Secretary shall— ^ 

(1) consider the costs of dry cask storage technology, the 
extent to which dry cask storage on the site of civilian nuclear ' 
power reactors will affect human health and the environment, ■ 
the extent to which the storage on the sites of civilian nuclear 
^ power reactors affects the costs and risk of transporting spent ; 

nuclear fuel to a central facility such as a monitored retrievable : 
storage facility, and any other factors the Secretary considers ,! 
appropriate; 



Grants. 
Contracts. 



Reports. 
Reports. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-255 



(2) consider the extent to which amounts in the Nuclear 
Waste Fund established in section 302(c) of the Nuclear Waste 
Policy Act of 1982 (42 U.S.C. 10222(c)) can be used, and should be 
used, to provide funds to construct, operate, maintain, and 
safeguard spent nuclear fuel in dry cask storage at the sites for 
civilian nuclear power reactors; 

(3) consult with the Commission and include the views of the 
Commission in the report under paragraph (1); and 

(4) solicit the views of State and local governments and the 
public. 

SKC. 506.5. AMENDMENTS TO THE TABLE OF CONTENTS. 

The table of contents of the Nuclear Waste Policy Act of 1982 is 
amended by — 

(1) adding at the end of subtitle C the following new sections: 

"Sec. 142. Authorization of monitored retrievable storage. 

"Sec. l43. Monitored Retrievable Storage Commission. 

"Sec. 144. Survey. 

"Sec. 145. Site selection. 

"Sec. 146. Notice of disapproval. 

"Sec. 147. Benefits agreement. 

"Sec. 148. Construction authorization. 

"Sec. 149. Financial assistance."; 

(2) adding at the end of title I the following new subtitles: 
"Subtitle E— Redirection of the Nuclear Waste Program 

"Sec. IBO. Selection of Yucca Mountain site. 
"Sec. 161. Siting a second repository. 

"Subtitle F— Benefits 

"Sec. 170. Benefits agreements. 
"Sec. 171. Content of agreements. 
"Sec. 172. Review panel. 
"Sec. 173. Termination. 

"Subtitle G — Other Benefits 

"Sec. 174. Consideration in siting facilities. 
"Sec. 175. Report. 

"Subtitle H— Transportation 
"Sec. 180. Transportation."; 

(3) adding at the end of title II the following new section. 

"Sec. 224. Subseabed disposal."; and 

(4) adding at the end the following new titles: 

"TITLE IV— NUCLEAR WASTE NEGOTIATOR 

"Sec. 401. Definition. 

"Sec. 402. The Office of Nuclear Waste Negotiator. 

"Sec. 403. Duties of the Negotiator. 

"Sec. 404. Environmental assessment of sites. 

"Sec. 405. Site characterization; licensmg. 

"Sec. 406. Monitored retrievable storage 

"Sec. 407. Environmental impact statement. 

"Sec. 408. Administrative powers of the Negotiator 

"Sec. 409. Cooperation of other departments and agencies. 

"Sec. 410. Termination of the office.". 



101 STAT. 1330-256 PUBLIC LAW 100-203— DEC. 22, 1987 



Federal Onshore 
Oil and Gas 
Leasing Reform 
Act of 1987. 
Contracts. 



30. use 181 note. 



Regulations. 



Subtitle B— Federal Onshore Oil and Gas 
Leasing Reform Act of 1987 

SEC. 5101. SHORT TITLE; REFERENCES. 

(a) Short Title.— This subtitle may be cited as the "Federal 
Onshore Oil and Gas Leasing Reform Act of 1987". 

(b) References. — Any reference in this subtitle to the "Act of 
February 25, 1920", is a reference to the Act of February 25, 1920, 
entitled "An Act to promote the mining of coal, phosphate, oil, oil 
shale, gas, and sodium on the public domain" (30 U.S.C. 181 and 
following). 

SEC. 5102. OIL AND GAS LEASING SYSTEM. 

(a) Competitive Bidding.— Section 17(b)(1) of the Act of Febru- 
ary 25, 1920 (30 U.S.C. 226(b)(1)), is amended to read as follows: 

"(b)(1)(A) All lands to be leased which are not subject to leasing 
under paragraph (2) of this subsection shall be leased as provided in 
this paragraph to the highest responsible qualified bidder by 
competitive bidding under general regulations in units of not more 
than 2,560 acres, except in Alaska, where units shall be not more 
than 5,760 acres. Such units shall be as nearly compact as possible. 
Lease sales shall be conducted by oral bidding. Lease sales shall be 
held for each State where eligible lands are available at least 
quarterly and more frequently if the Secretary of the Interior 
determines such sales are necessary. A lease shall be conditioned 
upon the payment of a royalty at a rate of not less than 12.5 percent 
in amount or value of the production removed or sold from the lease. 
The Secretary shall accept the highest bid from a responsible quali- 
fied bidder which is equal to or greater than the national minimum 
acceptable bid, without evaluation of the value of the lands proposed 
for lease. Leases shall be issued within 60 days following payment by 
the successful bidder of the remainder of the bonus bid, if any, and 
the annual rental for the first lease year. All bids for less than the 
national minimum acceptable bid shall be rejected. Lands for which 
no bids are received or for which the highest bid is less than the 
national minimum acceptable bid shall be offered promptly within 
30 days for leasing under subsection (c) of this section and shall 
remain available for leasing for a period of 2 years after the 
competitive lease sale. 

"(B) The national minimum acceptable bid shall be $2 per acre for 
a period of 2 years from the date of enactment of the Federal 
Onshore Oil and Gas Leasing Reform Act of 1987. Thereafter, the 
Secretary may establish by regulation a higher national minimum 
acceptable bid for all leases based upon a finding that such action is 
necessary: (i) to enhance financial returns to the United States; and 
(ii) to promote more efficient management of oil and gas resources 
on Federal lands. Ninety days before the Secretary makes any 
change in the national minimum acceptable bid, the Secretary shall 
notify the Committee on Interior and Insular Affairs of the (Jnited 
States House of Representatives and the Committee on Energy and 
Natural Resources of the United States Senate. The proposal or 
promulgation of any regulation to establish a national minimum 
acceptable bid shall not be considered a major Federal action subject 
to the requirements of section 102(2)(C) of the National Environ- 
mental Policy Act of 1969.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-257 



(b) Noncompetitive Leasing. — Section 17(c) of the Act of Feb- 
ruary 25, 1920 (30 U.S.C. 226(c)), is amended to read as follows: 
"(cXD If the lands to be leased are not leased under subsection 
|j (bXD of this section or are not subject to competitive leasing under 
i subsection Ob)(2) of this section, the person first making application 
for the lease who is qualified to hold a lease under this Act shall be 
j entitled to a lease of such lands without competitive bidding, upon 
, payment of a non-refundable application fee of at least $75. A lease 
' under this subsection shall be conditioned upon the payment of a 
; royalty at a rate of 12.5 percent in amount or value of the produc- 
' tion removed or sold from the lease. Leases shall be issued within 60 
I days of the date on which the Secretary identifies the first respon- 
sible qualified applicant. 

"(2)(A) Lands (i) which were posted for sale under subsection (b)(1) 
I of this section but for which no bids were received or for which the 
I highest bid was less than the national minimum acceptable bid and 
(ii) for which, at the end of the period referred to in subsection (b)(1) 
I of this section no lease has been issued and no lease application is 
I pending under paragraph (1) of this subsection, shall again be 
j available for leasing only in accordance with subsection (b)il) of this 
I section. 

"(B) The land in any lease which is issued under paragraph (1) of 
j this subsection or under subsection OoXD of this section which lease 
} terminates, expires, is cancelled or is relinquished shall again be 
j available for leasing only in accordance with subsection (b)(1) of this 
a section.". 

.1 (c) Rentals.— Section 17(d) of the Act of February 25, 1920 (30 
U.S.C. 226(d)), is amended to read as follows: 

"(d) All leases issued under this section, as amended by the 
J Federal Onshore Oil and Gas Leasing Reform Act of 1987, shall be 

i ' conditioned upon payment by the lessee of a rental of not less than 

$1.50 per acre per year for the first through fifth years of the lease 
(j and not less than $2 per acre per year for each year thereafter. A 
' minimum royalty in lieu of rental of not less than the rental which 

otherwise would be required for that lease year shall be payable at 
! the expiration of each lease year beginning on or after a discovery of 

oil or gas in paying quantities on the lands leased.". 

ii (d) Notice and Reclamation.— (1) Section 17 of the Act of Feb- 
ruary 25, 1920 (30 U.S.C. 226), is amended by redesignating subsec- 
tions (f) through (k) as subsections (i) through (n) and by adding the 
following new subsections (f) through (h): 

I "(f) At least 45 days before offering lands for lease under this Public 
I section, and at legist 30 days before approving applications for information, 
i permits to drill under the provisions of a lease or substantially 
i modifying the terms of any lease issued under this section, the 
Secretary shall provide notice of the proposed action. Such notice 
1 shall be posted in the appropriate local office of the leasing and land 
management agencies. Such notice shall include the terms or modi- 
l fled lease terms and maps or a narrative description of the affected 
I lands. Where the inclusion of maps in such notice is not practicable, 
» maps of the affected lands shall be made available to the public for 
review. Such maps shall show the location of all tracts to be leased, 
and of all leases already issued in the general area. The require- 
ments of this subsection are in addition to any public notice required 
by other law. 

"(g) The Secretary of the Interior, or for National Forest lands, Regulations, 
the Secretary of Agriculture, shall regulate all surface-disturbing 

t 

i 

I 

I 19-139 0 - 88 — 9 (203) 



101 STAT. 1380-258 PUBLIC LAW 100-203— DEC. 22, 1987 



activities conducted pursuant to any lease issued under this Act, and 
shall determine reclamation and other actions as required in the 
interest of conservation of surface resources. No permit to drill on 
an oil and gas lease issued under this Act may be granted without 
the analysis and approval by the Secretary concerned of a plan of 
operations covering proposed surface-disturbing activities within the 
lease area. The Secretary concerned shall, by rule or regulation, 
establish such standards as may be necessary to ensure that an 
adequate bond, surety, or other financial arrangement will be estab- 
lished prior to the commencement of surface-disturbing activities on 
any lease, to ensure the complete and timely reclamation of the 
lease tract, and the restoration of any lands or surface waters 
adversely affected by lease operations after the abandonment or 
cessation of oil and gas operations on the lease. The Secretary shall 
not issue a lease or leases or approve the assignment of any lease or 
leases under the terms of this section to any person, association, 
corporation, or any subsidiary, affiliate, or person controlled by or 
under common control with such person, association, or corporation, 
during any period in which, as determined by the Secretary of the 
Interior or Secretary of Agriculture, such entity hats failed or re- 
fused to comply in any material respect with the reclamation 
requirements and other standards established under this section for 
any prior lease to which such requirements and standards applied. 
Prior to making such determination with respect to any such entity 
the concerned Secretary shall provide such entity with adequate 
notification and an opportunity to comply with such reclamation 
requirements and other standards and shall consider whether any 
administrative or judicial appeal is pending. Once the entity has 
complied with the reclamation requirement or other standard con- 
cerned an oil or gas lease may be issued to such entity under this 
Act. 

"(h) The Secretary of the Interior may not issue any lease on 
National Forest System Lands reserved from the public domain over 
the objection of the Secretary of Agriculture.". 

(2) Section 31(h) of the Act of February 25, 1920 (30 U.S.C. 188(h)), 
is amended by striking out "section 17(j)" and substituting "section 
17(m)". 

SEC. 5103. ASSIGNMENTS. 

Sections 30(a) and 30(b) of the Act of February 25, 1920 (30 U.S.C. 
187a, 187b), are redesignated as sections 30A and 30B, respec- 
tively, and the third sentence of section 30A, as so redesignated, is 
amended to read as follows: "The Secretary shall disapprove the 
assignment or sublease only for lack of qualification of the assignee 
or sublessee or for lack of sufficient bond: Provided, however. That 
the Secretary may, in his discretion, disapprove an assignment of 
any of the following, unless the assignment constitutes the entire 
lease or is demonstrated to further the development of oil and gas: 

"(1) A separate zone or deposit under any lease. 

"(2) A part of a legal subdivision. 

"(3) Less than 640 acres outside Alaska or of less than 2,560 
acres within Alaska. 
Requests for approval of assignment or sublease shall be processed 
promptly by the Secretary. Except where the assignment or sublease 
is not in accordance with applicable law, the approval shall be given 
within 60 days of the date of receipt by the Secretary of a request for 
such approval.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-259 



SEC. 5104. LEASE CANCELLATION. 

The first sentence of section 31(b) of the Act of February 25, 1920 
(30 U.S.C. 188(b)) is amended to read as follows: "Any lease issued 
after August 21, 1935, under the provisions of section 17 of this Act 
shall be subject to cancellation by the Secretary of the Interior after 
i 30 days notice upon the failure of the lessee to comply with any of 
the provisions of the lease, unless or until the leasehold contains a 
' well capable of production of oil or gas in paying quantities, or the 
' lease is committed to an approved cooperative or unit plan or 
j communitization agreement under section 17(m) of this Act which 
j contains a well capable of production of unitized substances in 
i paying quantities.". 

SEC. 5105. ALASKA NATIONAL INTEREST LANDS CONSERVATION ACT. 



I Section 1008 of the Alaska National Interest Lands Conservation 
It Act (16 U.S.C. 3148) is amended as follows: 

(1) Subsections (c) and (e) are deleted in their entirety. 

(2) The second sentence of subsection 1008(d) is deleted. 

SEC. 5106. PENDING APPLICATIONS, OFFERS, AND BIDS. 

j- (a) Notwithstanding any other provision of this subtitle and except 
1 as provided in subsection (b) of this section, all noncompetitive oil 
and gas lease applications and offers and competitive oil and gas 
i' bids pending on the date of enactment of this subtitle shall be 
j processed, and leases shall be issued under the provisions of the Act 
■ of February 25, 1920, as in effect before its amendment by this 
,| subtitle, except where the issuance of any such lease would not be 
• lawful under such provisions or other applicable law. 

Ob) No noncompetitive lease applications or offers pending on the 
date of enactment of this subtitle for lands within the Shawnee 
' National Forest, Illinois; the Ouachita National Forest, Arkansas; 

Fort Chafee, Arkansas; or Eglin '® Air Force Base, Florida; shall be 
I processed until these lands are posted for competitive bidding in 
accordance with section 5102 of this subtitle. If any such tract does 
not receive a bid equal to or greater than the national minimum 
, acceptable bid from a responsible qualified bidder then the non- 
competitive applications or offers pending for such a tract shall be 
reinstated and noncompetitive leases issued under the Act of Feb- 
ruary 25, 1920, as in effect before its amendment by this subtitle, 
I except where the issuance of any such lease would not be lawful 
under such provisions or other applicable law. If competitive leases 
are issued for any such tract, then the pending noncompetitive 
application or offer shall be rejected. 

(c) Except as provided in subsections (a) and (b) of this section, all 
oil and gas leasing pursuant to the Act of February 25, 1920, after 
the date of enactment of this subtitle shall be conducted in accord- 
ance with the provisions of this subtitle. 

SEC. 5107. REGULATIONS; TEST SALE. 

(a) Regulations. — The Secretary shall issue final regulations to 
implement this subtitle within 180 days after the enactment of this 

I subtitle. The regulations shall be effective when published in the 
Federal Register. 

(b) Treatment Under Other Law. — The proposal or promulga- 
tion of such regulations shall not be considered a major Federal 



'Copy read "Elgin". 



30 use 226 note. 



30 use 226 note. 



Effective date. 
Federal Register, 
publication. 



101 STAT. 1330-260 PUBLIC LAW 100-203— DEC. 22, 1987 



action subject to the requirements of section 102(2)(C) of the i 
National Environmental Policy Act of 1969. jt 
(c) Test Sale. — The Secretary may hold one or more lease sales I 
conducted in accordance with the amendments made by this subtitle t 
before promulgation of regulations referred to in subsection (a). Sale | 
procedures for such sale shall be established in the notice of sale, i 

SEC. 5108. ENFORCEMENT. 

The Act of February 25, 1920, is amended by inserting after i 
section 40 the following new section: K 

30 use 195. "SEC. 41. ENFORCEMENT. * 

"(a) Violations. — It shall be unlawful for any person: | 
"(1) to organize or participate in any scheme, arrangement, 
plan, or agreement to circumvent or defeat the provisions of j 
this Act or its implementing regulations, or i 
"(2) to seek to obtain or to obtain any money or property by 3 
means of false statements of material facts or by failing to state 1, 
material facts concerning: 

'*(A) the value of any lease or portion thereof issued or to i? 
be issued under this Act; ? 

"(B) the availability of any land for leasing under this j? 
Act; 

"(C) the ability of any person to obtain leases under this |; 
Act; or i 

"(D) the provisions of this Act and its implementing | 
regulations. 

"(b) Penalty.— Any person who knowingly violates the provisions 
of subsection (a) of this section shall be punished by a fine of not 
more than $500,000, imprisonment for not more than five years, or 
both. 

"(c) Civil Actions. — Whenever it shall appear that any person is 
engaged, or is about to engage, in any act which constitutes or will 
constitute a violation of subsection (a) of this section, the Attorney t 
General may institute a civil action in the district court of the 
United States for the judicial district in which the defendant resides 
or in which the violation occurred or in which the lease or land I 
involved is located, for a temporary restraining order, injunction, 
civil penalty of not more than $100,000 for each violation, or other * 
appropriate remedy, including but not limited to, a prohibition from 
participation in exploration, leasing, or development of any Federal 
mineral, or any combination of the foregoing. 

"(d) Corporations. — (1) Whenever a corporation or other entity is 
subject to civil or criminal action under this section, any officer, 
employee, or agent of such corporation or entity who knowingly ^ 
authorized, ordered, or carried out the proscribed activity shall be 
subject to the same action. 

"(2) Whenever any officer, employee, or agent of a corporation or 
other entity is subject to civil or criminal action under this section 1 
for activity conducted on behalf of the corporation or other entity, 
the corporation or other entity shall be subject to the same action, 
unless it is shown that the officer, employee, or agent was acting 
without the knowledge or consent of the corporation or other entity. 

"(e) Remedies, Fines, and Imprisonment. — The remedies, pen- 
alties, fines, and imprisonment prescribed in this section shall be 
concurrent and cumulative and the exercise of one shall not pre- 
clude the exercise of the others. Further, the remedies, penalties, 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-261 



fines, and imprisonment prescribed in this section shall be in addi- 
tion to any other remedies, penalties, fines, and imprisonment 
afforded by any other law or regulation. 

"(f) State Civil Actions. — (1) A State may commence a civil 
action under subsection (c) of this section against any person 
conducting activity within the State in violation of this section. Civil 
III actions brought by a State shall only be brought in the United 
' States district court for the judicial district in which the defendant 
resides or in which the violation occurred or in which the lease or 
land involved is located. The district court shall have jurisdiction, 
without regard to the amount in controversy or the citizenship of 
the parties, to order appropriate remedies and penalties as described 
in subsection (c) of this section. 

"(2) A State shall notify the Attorney General of the United States 
of any civil action filed by the State under this subsection within 30 
I days of filing of the action. The Attorney General of the United 
l| States shall notify a State of any civil action arising from activity 
j conducted within that State filed by the Attorney General under 
i this subsection within 30 days of filing of the action. 

"(3) Any civil penalties recovered by a State under this subsection 
shall be retained by the State and may be expended in such manner 
I* and for such purposes as the State deems appropriate. If a civil 
' action is jointly brought by the Attorney General and a State, by 
I more than one State or by the Attorney General and more than one 
State, any civil penalties recovered as a result of the joint action 
shall be shared by the parties bringing the action in the manner 
determined by the court rendering judgment in such action. 

"(4) If a State has commenced a civil action against a person 
. conducting activity within the State in violation of this section, the 
|i' Attorney General may join in such action but may not institute a 
separate action arising from the same activity under this section. If 
the Attorney General has commenced a civil action against a person 
, conducting activity within a State in violation of this section, that 
'I State may join in such action but may not institute a separate action 
'; arising from the same activity under this section. 
I "(5) Nothing in this section shall deprive a State of jurisdiction to 
' enforce its own civil and criminal laws against any person who may 
, also be subject to civil and criminal action under this section.' . 

SEC. 5109. PAYMENTS TO STATES. 

Section 35 of the Act of February 25, 1920 (30 U.S.C. 191) is 
; amended by adding the following at the end thereof: "In determin- 
ing the amount of payments to States under this section, the amount 
of such payments shall not be reduced by any administrative or 
j other costs incurred by the United States.". 

SEC. 51 10. REPORT. 30 USC 226 note. 

The Secretary shall submit annually for 5 years after enactment 
of this subtitle to the Congress a report containing appropriate 
information to facilitate congressional monitoring of this subtitle. 
Such report shall include, but not be limited to — 
I (1) the number of acres leased, and the number of leases 

issued, competitively and noncompetitively; 
' (2) the amount of revenue received from bonus bids, filing 

fees, rentals, and royalties; 

(3) the amount of production from competitive and non- 
competitive leases; and 



101 STAT. 1330-262 PUBLIC LAW 100-203— DEC. 22, 1987 



(4) such other data and information as will facilitate — 

(A) an assessment of the onshore oil and gas leasing 
system, and 

(B) a comparison of the system as revised by this subtitle 
with the system in operation prior to the enactment of this ] 
subtitle. 

30 use 226 note. SEC. 5111. LAND USE STUDY. ] 

The National Academy of Sciences and the Comptroller General i 
of the United States shall conduct a study of the manner in which j 
oil and gas resources are considered in the land use plans developed 
by the Secretary of the Interior in accordance with provisions of the , 
Federal Land Policy and Management Act of 1976 (90 Stat. 2743) 1 
and the Secretary of Agriculture in accordance with the Forest and 
Rangeland Renewable Resources Planning Act of 1974 (88 Stat. 476), ^ 
as amended by the National Forest Management Act of 1976 (90 
Stat. 2949), and recommend any improvements that may be nec- 
essary to ensure that — 

(1) potential oil and gas resources are adequately addressed in ; 
planning documents; I 

(2) the social, economic, and environmental consequences of 
exploration and development of oil and gas resources are deter- 
mined; and 

(3) any stipulations to be applied to oil and gas leases are 
clearly identified. 

SEC. 51 1 2. LANDS NOT SUBJECT TO OIL AND GAS LEASING. 

The Act of February 25, 1920, is amended by adding the following 
at the end thereof: | 

30 use 226-3. "SEC. 43. LANDS NOT SUBJECT TO OIL AND GAS LEASING. 

"(a) Prohibition. — The Secretary shall not issue any oil and gas 
lease under this Act on any of the following Federal lands: 

"(1) Lands recommended for wilderness allocation by the 
surface managing agency. 

"(2) Lands within Bureau of Land Management wilderness I 
study areas. 

"(3) Lands designated by Congress as wilderness study areas, 
except where oil and gas leasing is specifically allowed to 
continue by the statute designating the study area. 

"(4) Lands within areas allocated for wilderness or further 
planning in Executive Communication 1504, Ninety-Sixth Con- 
gress (House Document numbered 96-119), unless such lands 
are allocated to uses other than wilderness by a land and 
resource management plan or have been released to uses other 
than wilderness by an act of Congress. 
"Co) Exploration.— In the case of any area of National Forest or 
public lands subject to this section, nothing in this section shall 
affect any authority of the Secretary of the Interior (or for National 
Forest Lands reserved from the public domain, the Secretary of 
Agriculture) to issue permits for exploration for oil and gas by 
means not requiring construction of roads or improvement of exist- 
ing roads if such activity is conducted in a manner compatible with 
the preservation of the wilderness environment.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-263 



SEC. 5113. SHORT TITLE. Mineral Leasing 

Act 

The Act of February 25, 1920, is amended by inserting after 
section 43 the following new section: 

"SEC. 44. SHORT TITLE. 30 USC 181 note. 

"This Act may be cited as the 'Mineral Leasing Act'.". 

Subtitle C — Land and Water Conservation 
Fund and Tongass Timber Supply Fund 

SEC. 5201. LAND AND WATER CONSERVATION FUND ACT AMENDMENTS. 

(a) Admission Fees.— Section 4(a) of the Land and Water Con- 
servation Fund Act of 1965 (16 U.S.C. 4601-6a(a)) is amended as 
follows: 

(1) Paragraph (1) is amended by striking out "$10" and insert- 
ing in lieu thereof "$25" in the first sentence. 

(2) Paragraph (1) is further amended by striking out "(1)" and 
inserting in lieu thereof "(IXA)" and adding the following new 
subparagraph at the end thereof: 

"(B) For admission into a specific designated unit of the 
National Park System, or into several specific units located in a 
particular geographic area, the Secretary is authorized to make 
available an annual admission permit for a reasonable fee. The 
fee shall not exceed $15 regardless of how many units of the 
park system are covered. The permit shall convey the privileges 
of, and shall be subject to the same terms and conditions as, the 
Golden Eagle Passport, except that it shall be valid only for 
admission into the specific unit or units of the National Park 
System indicated at the time of purchase.". 

(3) Paragraph (2) is amended by adding the following sen- 
tences at the end thereof: "The fee for a single-visit permit at 
any designated area applicable to those persons entering by 
private, noncommercial vehicle shall be no more than $5 per 
vehicle. The single-visit permit shall admit the permittee and 
all persons accompanying him in a single vehicle. The fee for a 
single-visit permit at any designated area applicable to those 
persons entering by any means other than a private non- 
commercial vehicle shall be no more than $3 per person. Except 
as otherwise provided in this subsection, the maximum fee 
amounts set forth in this paragraph shall apply to all des- 
ignated areas.". 

(4) Paragraph (3) is amended by adding the following new 
sentence at the end thereof: "Notwithstanding any other provi- 
sion of this Act, no admission fee may be charged at any unit of 
the National Park System which provides significant outdoor 
recreation opportunities in an urban environment and to which 
access is publicly available at multiple locations.". 

(5) Add the following new paragraphs: 

"(6)(A) No later than 60 days after the date of enactment of Reports, 
this paragraph, the Secretary of the Interior shall submit to the 
Committee on Interior and Insular Affairs of the United States 
House of Representatives and the Committee on Energy and 
Natural Resources of the United States Senate a report on the 
entrance fees proposed to be charged at units of the National 
Park System. The report shall include a list of units of the 



101 STAT. 1330-264 PUBLIC LAW 100-203— DEC. 22, 1987 



National Park System and the entrance fee proposed to be 
charged at each unit. The Secretary of the Interior shall include 
in the report an explanation of the guidelines used in applying 
the criteria in subsection (d). 

"(B) Following submittal of the report to the respective 
committees, any proposed changes to matters covered in the 
report, including the addition or deletion of park units or the 
increase or decrease of fee levels at park units shall not take 
effect until 60 days after notice of the proposed change has been 
submitted to the committees. 

"(7) No admission fee may be charged at any unit of the 
National Park System for admission of any person 16 years of 
age or less. 

"(8) No admission fee may be charged at any unit of the 
National Park System for admission of organized school groups 
or outings conducted for educational purposes by schools or 
other bona fide educational institutions. 

"(9) No admission fee may be charged at the following units of 
the National Park System; U.S.S. Arizona Memorial, Independ- 
ence National Historical Park, any unit of the National Park 
System within the District of Columbia, Arlington House — 
Robert E. Lee National Memorial, San Juan National Historic 
Site, and Canaveral National Seashore. 

**(10) For each unit of the National Park System where an 
admission fee is collected, the Director shall annually designate 
at least one day during periods of high visitation as a Tee-Free 
Day' when no admission fee shall be charged. 
, "(11) In the case of the following parks, the fee for a single- 

visit permit applicable to those persons entering by private, 
noncommercial vehicle (the permittee and all persons accom- 
panying him in a single vehicle) shall be no more than $10 per 
vehicle and the fee for a single-visit permit applicable to persons 
entering by any means other than a private noncommercial 
vehicle shall be no more than $5 per person: Yellowstone Na- 
tional Park and Grand Teton National Park and after the end 
of fiscal year 1990, Grand Canyon National Park, in the case of 
Yellowstone and Grand Teton, a single-visit fee collected at one 
unit shall also admit the vehicle or person who paid such fee for 
a single-visit to the other unit. 

"(12) Notwithstanding section 203 of the Alaska National 
Interest Lands Conservation Act, the Secretary may charge an 
admission fee under this section at Denali National Park and 
Preserve in Alaska.". 

(b) Visitor Reservation Services. — Section 4(f) of the Land and 
Water Conservation Fund Act of 1965 (16 U.S.C. 4601-6a(f)) is 
amended to read as follows: 

Contracts. "(0 The head of any Federal agency, under such terms and 

conditions as he deems appropriate, may contract with any public or 
private entity to provide visitor reservation services. Any such 
contract may provide that the contractor shall be permitted to 
deduct a commission to be fixed by the agency head from the 
amount charged the public for providing such services and to remit 
the net proceeds therefrom to the contracting agency.". 

(c) Special Provisions.— Section 4 of the Land and Water Con- 
servation Fund Act of 1965 (16 U.S.C. 4601-6a) is amended by adding 
the following new subsections at the end thereof: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-265 



"(iXD Except in the case of fees collected by the United States Contracts. 
I Fish and Wildlife Service or the Tennessee Valley Authority, ail 
I receipts from fees collected pursuant to this section by any Federal 
i I agency (or by any public or private entity under contract with a 
Federal agency) shall be covered into a special account for that 
i agency established in the Treasury of the United States. Fees 
collected by the Secretary of Agriculture pursuant to this subsection 
shall continue to be available for the purposes of distribution to 
States and counties in accordance with applicable law. 
j "(2) Amounts covered into the special account for each agency 
I during each fiscal year shall, after the end of such fiscal year, be 
jj available for appropriation solely for the purposes and in the 
i manner provided in this subsection. No funds shall be transferred 
jj from fee receipts made available under this Act to each unit of the 
i national park system: Provided^ however, That in making appropria- 
tions, funds derived from such fees may be used for any purpose 
(| authorized therein. Funds credited to the special account shall 
j; remain available until expended. 

I "(3) For agencies other than the National Park Service, such 
J funds shall be made available for resource protection, research, 
I interpretation, and maintenance activities related to resource 
; protection in areas managed by that agency at which outdoor 
recreation is available. To the extent feasible, such funds should be 
used for purposes (as provided for in this paragraph) which are 
directly related to the activities which generated the funds, includ- 
ing but not limited to water-based recreational activities and 
. camping. 

"(4) Amounts covered into the special account for the National 
; Park Service shall be allocated among park system units in accord- 
ance with subsection (j) for obligation or expenditure by the Director 
of the National Park Service for the following purposes: 
ij "(A) In the case of receipts from the collection of admission 

I fees: for resource protection, research, and interpretation at 
units of the National Park System. 

"(B) In the case of receipts from the collection of user fees: for 
resource protection, research, interpretation, and maintenance 
activities related to resource protection at units of the National 
Park System. 

"(j)(l) 10 percent of the funds made available to the Director of the 
National Park Service under subsection (i) in each fiscal year shall 
be allocated among units of the National Park System on the basis 
I of need in a manner to be determined by the Director. 

"(2) 40 percent of the funds made available to the Director of the 
National Park Service under subsection (i) in each fiscal year shall 
' be allocated among units of the National Park System in accordance 
1 with paragraph (3) of this subsection and 50 percent shall be allo- 
Y cated in accordance with paragraph (4) of this subsection. 
I "(3) The amount allocated to each unit under this paragraph for 
I each fiscal year shall be a fraction of the total allocation to all units 
I under this paragraph. The fraction for each unit shall be deter- 
mined by dividing the operating expenses at that unit during the 
1 prior fiscal year by the total operating expenses at all units during 
j the prior fiscal year. 

j "(4) The amount allocated to each unit under this paragraph for 
each fiscal year shall be a fraction of the total allocation to all units 
under this paragraph. The fraction for each unit shall be deter- 
mined by dividing the user fees and admission fees collected under 



101 STAT. 1330-266 PUBLIC LAW 100-203— DEC. 22, 1987 



this section at that unit during the prior fiscal year by the total of 
user fees and admission fees collected under this section at all units ] 
during the prior fiscal year. 

"(5) Amounts allocated under this subsection to any unit for any ' 
fiscal year and not expended in that fiscal year shall remain avail-, 
able for expenditure at that unit until expended. 

"(k) When authorized by the head of the collecting agency, volun- 
teers at designated areas may sell permits and collect fees au- 
thorized or established pursuant to this section. The head of such! 
agency shall ensure that such volunteers have adequate training! 
regarding — 

"(1) the sale of permits and the collection of fees, I 
"(2) the purposes and resources of the areas in which they are 
assigned, and I 
"(3) the provision of assistance and information to visitors to | 
the designated area. 
The Secretary shall require a surety bond for any such volunteer 
performing services under this subsection. Funds available to thei 
collecting agency may be used to cover the cost of any such surety \ 
bond. The head of the collecting agency may enter into arrange- j* 
ments with qualified public or private entities pursuant to which 
such entities may sell (without cost to the United States) annual 
admission permits (including Golden Eagle Passports) at any appro- 1 
priate location. Such arrangements shall require each such entity to 
reimburse the United States for the full amount to be received from 
the sale of such permits at or before the agency delivers the permits f 
to such entity for sale. 

"(1)(1) Where the National Park Service provides transportation to 
view all or a portion of any unit of the National Park System, the 
Director may impose a charge for such service in lieu of an admis- 
sion fee under this section. The charge imposed under this para- 
graph shall not exceed the maximum admission fee under sub- 
section (a). 

''(2) Notwithstanding any other provision of law, half of the 
charges imposed under paragraph (1) shall be retained by the unit of 
the National Park System at which the service was provided. The 
remainder shall be covered into the special account referred to in li 
subsection (i) in the same manner as receipts from fees collected s 
pursuant to this section. Fifty percent of the amount retained shall j 
be expended only for maintenance of transportation systems at the 
unit where the charge was imposed. The remaining 50 percent of the i[ 
retained amount shall be expended only for activities related to ij 
resource protection at such units. 3 

"(m) Where the primary public access to a unit of the National } 
Park System is provided by a concessioner, the Secretary may ^ 
charge an admission fee at such units only to the extent that the i' 
total of the fee charged by the concessioner for access to the unit 
and the admission fee does not exceed the maximum amount of t 
the admission fee which could otherwise be imposed under sub- ^ 
section (a).". ii 
16 use 460/-5a. (d) Repeaus.— (1) Title I of Public Law 96-514 is amended by , 
striking out the following provisions which appear under the head- 
ing "Land and Water Conservation Fund": "Notwithstanding the j 
provisions of Public Law 90-401, revenues from recreation fee coUec- ,\ 
tions by Federal agencies shall hereafter be paid into the Land and \ 
Water Conservation Fund, to be available for appropriation for any ( 
or all purposes authorized by the Land and Water Conservation 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-267 



16 use 460/-5a 
note. 

16 use 460/-6a 
note. 



Fund Act of 1965, as amended, without regard to the source of such 
revenues.". 

(2) Section 402 of the Act of October 12, 1979 (93 Stat. 664), is 16 USe 460/-6b 
hereby repealed. 

(3) The seventh paragraph of title I of the Energy and Water 
Development Appropriation Act, 1982, entitled "Special Recreation 
Use Fees" is hereby repealed. 

(e) Study. — (1) The Secretary of the Interior shall assess the 
extent to which traffic congestion and overcrowding occurs at cer- 
tain park system units during times of seasonally high usage and 
shall conduct a study of the following — 

(A) the feasibility of reducing vehicular traffic within national 
park system units through fee reductions for visitors traveling 
by bus and through other means which could shift visitation 
from automobiles to buses; and 

(B) the feasibility of encouraging more even seasonal distribu- 
tion of visitation. 

(2) The study shall include a pilot project to be carried out in 
Yosemite National Park. For purposes of such pilot project, the 
Secretary may reduce the fees for admission of various classes or 
categories of visitors to Yosemite National Park and may reduce the 
admission fees imposed at the park during seasons with low visita- 
tion. A report containing the results of the study shall be transmit- 
ted to the Committee on Interior and Insular Affairs of the United 
States House of Representatives and to the Committee on Energy 
and Natural Resources of the United States Senate within 3 years 
after the enactment of this Act. 

if) Extension of Land and Water Conservation Fund.— (1) 
Section 2 of the Land and Water Conservation Fund Act of 1965 (16 
U.S.C. 4601 and following) is amended as follows: 

(A) In the matter preceding subsection (a) strike "1989" and 
substitute "2015". 

(B) In subsection (c)(1) strike "1989" and substitute "2015". 
(2) The last sentence of section 3 of the Land and Water Conserva- 
tion Fund Act of 1965 (16 U.S.C. 4601 and following) is amended to 
read as follows: "Moneys made available for obligation or expendi- 
ture from the fund or from the special account established under 
section 4(i)(l) may be obligated or expended only as provided in this 
Act.". 

(g) Relationship to Fiscal Year 1988 Appropriations. — For pur- 
poses of legislation providing appropriations for the fiscal year 1988 
to the Department of the Interior, the provisions of this section shall 
be treated as "permanent statutory language" establishing entrance 
fees for the National Park Service. 



Reports. 



16 use 460Z-5. 



16 use 460/-6. 



SEC. 5202. TONGASS TIMBER SUPPLY FUND. 

From the period beginning on October 1, 1987, and extending until 
September 30, 1989, the provisions of section 705(a) of the Alaska 
National Interest Lands Conservation Act of 1980 (16 U.S.C. 539(d)) 
shall not be effective. In lieu thereof, the following provision shall 
apply: 

"There is hereby authorized to be appropriated the sum of at least 
$40,000,000 annually (or such sums as the Secretary of Agriculture 
determines necessary) to maintain the timber supply from the 
Tongass National Forest to dependent industry at a rate of 
4,500,000,000 foot board measure per decade." 



16 use 539d 
note. 



101 STAT. 1330-268 



PUBLIC LAW 100-203— DEC. 22, 1987 



Subtitle D — Reclamation 



43 use 421b 
note. 



Contracts. 



43 use 390ww. 



Reports. 



Contracts. 



SEC. 5301. SALE OF BUREAU OF RECLAMATION LOANS. | 

(a) Sale. — The Secretary of the Interior (hereinafter in this sec- 
tion referred to as the "Secretary"), under such terms as the Sec-i 
retary shall prescribe, shall sell or otherwise dispose of loan& made ! 
pursuant to the Distribution System Loans Act (43 U.S.C. 421a- i 
421d), the Small Reclamation Projects Act (43 U.S.C. 422a-4221), and I 
the Rehabilitation and Betterment Act (43 U.S.C. 504-505) in such li 
amounts as to realize net proceeds to the Federal Government of not 1 
less than $130,000,000 in the fiscal year ending September 30, 1988. ^ 
In the conduct of such sales, the Secretary shall take such actions as ^ 
he deems appropriate to accommodate, effectuate, and otherwise 
protect the rights and obligations of the United States and the ^ 
borrowers under the contracts executed to provide for repayment of 
such loans. li 

(b) Savings Provisions. — Nothing in this section, including the 
prepayment or other disposition of any loan or loans, shall — I 

(1) except to the extent that prepayment may have been 
authorized heretofore, relieve the borrower from the application i 
of the provisions of Federal Reclamation law (Act of June 17, ' 
1902, and Acts amendatory thereof or supplementary thereto, 
including the Reclamation Reform Act of 1982), including acre- 
age limitations, to the extent such provisions would apply 
absent such prepayment, or 

(2) authorize the transfer of title to any federally owned 
facilities funded by the loans specified in subsection (a; of this i 
section without a specific Act of Congress. 

(c) Fees and Expenses of Program.— Proceeds from the conduct 
of the program authorized by this section shall be first used to pay ' 
the fees and expenses of such program and the net proceeds shall be 
deposited in the Treasury of the United States as miscellaneous \ 
receipts. ! 

(d) Termination. — The authority granted by this section to sell or ; 
otherwise dispose of loans shall terminate on December 31, 1988. 

SEC. 5302. RECLAMATION REFORM ACT AMENDMENTS. 

(a) Audit. — Section 224 of the Reclamation Reform Act of 1982 
(Public Law 97-293) is amended by adding the following new subsec- j 
tions after subsection (f): 

"(g) In addition to any other audit or compliance activities which 
may otherwise be undertaken, the Secretary of the Interior, or his | 
designee, shall conduct a thorough audit of the compliance with the ' 
reclamation law of the United States, specifically including this Act, ^ 
by legal entities and individuals subject to such law. At a minimum, f 
the Secretary shall complete audits of those legal entities and f 
individuals whose landholdings or operations exceed 960 acres 
within 3 years. The Secretary shall submit an annual written report 
to the Senate Committee on Energy and Natural Resources and the 
House Committee on Interior and Insular Affairs. Such report shall 
summarize the legal entities and individuals audited, the results of 
such audits, and the actions taken by the Secretary to correct any 
instances of noncompliance with the reclamation law. 

"(h) The provisions of section 205(c) are and have been applicable 
to all recordable contracts executed prior to October 12, 1982, and 
any decision, rule, or regulation promulgated by the Department of 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-269 

the Interior to the contrary is hereby revoked: Providedy That 
notwithstanding the provisions of subsection (i), the Secretary shall 
not seek reimbursement for any amounts due under this subsection 
or section 205(c) which was due prior to the date of enactment of this 
subsection. 

"(i) When the Secretary finds that any individual or legal entity 
subject to reclamation law, includmg this Act, has not paid the 
required amount for irrigation water delivered to a landholding 
pursuant to reclamation law, including this Act, he shall collect the 
amount of any underpayment with interest accruing from the date 
the required payment was due until paid. The interest rate shall be 
determined by the Secretary of the Treasury on the basis of the 
weighted average yield of all interest bearing marketable issues sold 
by the Treasury during the period of underpayment.". 

(b) Revocable Trusts.— Section 214 of the Reclamation Reform 
Act of 1982 (Public Law 97-293) is amended by inserting "(a)" after 43 use 390nn. 
"214" and by adding the following new subsection at the end 
thereof: 

"(b) Lands placed in a revocable trust shall be attributable to the 
grantor if— 

"(1) the trust is revocable at the discretion of the grantor and 
revocation results in the title to such lands reverting either 
directly or indirectly to the grantor; or 

"(2) the trust is revoked or terminated by its terms upon the 
expiration of a specified period of time and the revocation or 
termination results in the title to such lands reverting either 
directly or indirectly to the grantor.". 

Subtitle E — Panama Canal 

SEC. 5401. REFERENCE TO THE PANAMA CANAL ACT OF 1979. 

Except as otherwise expressly provided, whenever in this subtitle 
an amendment or repeal is expressed in terms of an amendment to, 
or repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Panama 
Canal Act of 1979 (22 U.S.C. 3601 and following). 

PART 1— PANAMA CANAL REAUTHORIZATION 

SEC. 5411. OPERATING EXPENSES. 

There is authorized to be appropriated from the Panama Canal 
Commission Fund to the Panama Canal Commission (hereafter in 
this part referred to as the "Commission") for the fiscal year 
beginning October 1, 1987, not to exceed $467,050,000, for necessary 
expenses of the Commission incurred under the Panama Canal Act 
of 1979 (22 U.S.C. 3601 and following), including expenses for— 

(1) the hire of passenger motor vehicles and aircraft; 

(2) the purchase of passenger motor vehicles as may be nec- 
essary for fiscal year 1988, the number and price of which shall 
not exceed the amount provided in appropriation Acts; except 
that large heavy-duty passenger sedans used to transport 
Commission employees across the Isthmus of Panama may be 
purchased for fiscal year 1988 without regard to price limita- 
tions set forth in applicable regulations of any department or 
agency of the United States; 



101 STAT. 1330-270 PUBLIC LAW 100-203— DEC. 22, 1987 



(3) official receptions and representation expenses, except 
that not more than $43,000 may be made available for such 
expenses, of which (A) not more than $10,000 may be made 
available for such expenses of the Supervisory Board of the 
Commission, (B) not more than $5,000 may be made available 
for such expenses of the Secretary of the Commission, and (C) 
not more than $28,000 may be made available for such expenses 
of the Administrator of the Commission; 

(4) the procurement of expert and consultant services as 
provided in section 3109 of title 5, United States Code; 

(5) a residence for the Administrator of the Commission; 

(6) uniforms, or allowances therefor, as authorized by section 
5901 and 5902 of title 5, United States Code; 

(7) disbursements by the Administrator of the Commission for 
, employee recreation and community projects; and 

(8) the operation of guide services. 

SEC. 5412. CAPITAL OUTLAY. 

Of any funds appropriated pursuant to section 5411, not more 
than $37,000,000 (which is authorized to remain available until 
expended) may be made available for the acquisition, construction, 
replacement and improvements of facilities, structures, and equip- 
ment required by the Commission. 

SEC. 5413. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS. 

In addition to the amount authorized to be appropriated by sec- 
tion 5411, there are authorized to be appropriated to the Commis- 
sion for the fiscal year 1988 such amounts as may be necessary for — 

(1) increases in salary, pay, retirement, and other employee 
benefits provided by law; 

(2) covering payments to Panama under paragraph 4(a) of 
Article XIII of the Panama Canal Treaty of 1977, as provided by 
section 1341(a) of the Panama Canal Act of 1979 (22 U.S.C. 
3751(a)); and 

(3) increased costs for fuel. 

SEC. 5414. INSURANCE. 

Section 1419 (22 U.S.C. 3779) is amended by inserting "or other 
unpredictable events" after "marine accidents". 

Contracts SEC. 5415. AUTHORITY TO LEASE OFFICE SPACE. 

22 use 3712a 

Notwithstanding section 210 of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 490), the Commission 
is authorized to negotiate directly and enter into contracts for the 
lease of, and for improvements to, real property in the United States 
for use by the Commission as office space, on such terms as the 
Commission considers to be in the interest of the United States, and 
to make direct payments therefor. 

SEC. 5416. COMPENSATION OF BOARD MEMBERS. 

Section 11020)) (22 U.S.C. 3612(b)) is amended by inserting before 
the period at the end thereof the following: "or, as authorized by the 
Chairman of the Board, while on official Panama Canal Commis- 
sion business". 



'Copy read "an". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-271 



SKC. 5417. SETTLKMENT OF C LAIMS. 

(a) Settlement of Claims— Section 1401(b) (22 U.S.C. 3761(b)) is 
amended to read as follows: 

"(b) The Commission may pay not more than $50,000 on any claim 
described in subsection (a).". 

(b) Injuries to Vessels Without Pilots. — Section 1411(b)(1) (22 
U.S.C. 3771(b)(1)) is amended by striking out "adjust and pay" and 
all that follows through "$50,000" and inserting in lieu thereof "pay 
not more than $50,000 on the claim". 

j SEC. 5418. REPORT TO CONGRESS. 22 USC 3871 

Out of the funds authorized to be appropriated by this part, the 
Commission shall prepare and submit to the Congress a report on — 

(1) the condition of the Panama Canal and potential adverse 
effects on United States shipping and commerce; 

(2) the effect on canal operations of the military forces under Manuel Noriega. 
General Noriega; and 

(3) the Commission's evaluation of the effect on canal oper- 
ations if the Panamanian Government continues to withhold its 
consent to major factors in the United States Senate's ratifica- 
tion of the Panama Canal Treaties. 



PART 2— PANAMA CANAL REVOLVING FUND 

SP:C. 5421. SHORT TITLE. 

This part may be referred to as the "Panama Canal Revolving 
Fund Act". 

SEC. 5422. ESTABLISHMENT OF REVOLVING FUND. 

(a) Establishment.— Section 1302 (22 U.S.C. 3712) is amended by 
striking out subsections (a) through (d) and inserting in lieu thereof 
the following: 

"Sec. 1302. (aXl) There is established in the Treasury of the 
United States a revolving fund to be known as the 'Panama Canal 
Revolving Fund'. The Panama Canal Revolving Fund shall, subject 
to subsection (c), be available to the Commission to carry out the 
purposes, functions, and powers authorized by this Act, including 
for- 

"(A) the hire of passenger motor vehicles and aircraft; 

"(B) uniforms or allowances therefor, as authorized by sec- 
tions 5901 and 5902 of title 5, United States Code; 

"(C) official receptions and representation expenses of the 
Board, the Secretary of the Commission, and the Administrator; 

"(D) the operation of guide services; 

"(E) a residence for the Administrator; 

"(F) disbursements by the Administrator for employee and 
community projects; and 

"(G) the procurement of expert and consultant services as 
provided in section 3109 of title 5, United States Code. 
"(2) On the effective date of the Panama Canal Revolving Fund 
Act— 

"(A) the Panama Canal Commission Fund shall be terminated 
and the unappropriated balance, including undeposited receipts 
as of the close of business on the day before the effective date of 
the Panama Canal Revolving Fund Act, shall be transferred to 
the Panama Canal Revolving Fund; 



Panama Canal 
Revolving Fund 
Act. 

22 USC 3601 
note. 



101 STAT. 1330-272 PUBLIC LAW 100-203— DEC. 22, 1987 



"(B) the unexpended balance of appropriations to the Commis- 
sion, as of the close of business on the day before the effective 
date of the Panama Canal Revolving Fund Act, shall be trans- 
ferred to the Panama Canal Revolving Fund, and such amounts, 
including amounts appropriated for capital expenditures, shall 
remain available until expended; 

"(C) the assets and liabilities recorded before such effective 
date under the 'Panama Canal Commission Fund' shall be 
recorded under the Panama Canal Revolving Fund; and 
i ; ' "(D) the Panama Canal Emergency Fund shall be terminated 

and the remaining balance shall be transferred to the Panama 
Canal Revolving Fund. 
"(b) Upon completion of the transfers of funds under subsection 
(a)- 

"(1) amounts attributable to interest on the investment of the 
United States in the Panama Canal which accrued before Janu- 
ary 1, 1986, shall be transferred from the Panama Canal Revolv- 
ing Fund to the general fund of the Treasury; and 

"(2) such amounts as were appropriated to the Commission in 
the fiscal year which ended September 30, 1980, and for which 
the Commission has not reimbursed the general fund of the 
Treasury, shall be transferred to the general fund of the 
Treasury. 

"(c)(1) There shall be deposited in the Panama Canal Revolving 
Fund, on a continuing basis, toll receipts and all other receipts of 
the Commission. Except as provided in section 1303 and subject to 
paragraph (2), no funds may be obligated or expended by the 
Commission in any fiscal year unless such obligation or expenditure 
has been specifically authorized by law. 

"(2) No funds may be obligated or expended by the Commission in 
any fiscal year for administrative expenses except to the extent or in 
such amounts as are provided in appropriations Acts. 

"(3) No funds may be authorized for the use of the Commission, or 
obligated or expended by the Commission in any fiscal year in excess 
of— 

"(A) the amount of revenues deposited in the Panama Canal 
Revolving Fund during such fiscal year, plus 

"(B) the amount of revenues deposited in the Panama Canal 
Revolving Fund before such fiscal year and remaining unex- 
pended at the beginning of such fiscal year. 
Reports. Not later than 30 days after the end of each fiscal year, the 

Secretary of the Treasury shall report to the Congress the amount of 
revenues deposited in the Panama Canal Revolving Fund during 
such fiscal year. 

"(d) With the approval of the Secretary of the Treasury, the 
Commission may deposit amounts in the Panama Canal Revolving 
Fund in any Federal Reserve bank, any depository for public funds, 
or in such other places and in such manner as the Commission and 
the Secretary may agree. 

"(e) The Committee on Appropriations of each House of Congress 
shall review the annual budget of the Commission, including oper- 
ations and capital expenditures.". 

(b) Conforming Amendments.— (1) The section heading for sec- 
22 use 3712. tion 1302 is amended to read as follows: 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-273 



"PANAMA CANAL REVOLVING FUND". 

(2) The item relating to section 1302 in the table of contents of the 
Panama Canal Act of 1979 is amended to read as follows: 

"1302. Panama Canal Revolving Fund.". 
SEC. 5423. EMERGENCY AUTHORITY. 

I (a) Grant of Authority.— Section 1303 (22 U.S.C. 3713) is ^ 
amended to read as follows: 

"Sec. 1303. If authorizing legislation described in section 1302(c)(1) 
has not been enacted for a fiscal year, then the Commission may 
withdraw funds from the Panama Canal Revolving Fund in order to 
defray emergency expenses and to ensure the continuous, efficient, 
and safe operation of the Panama Canal, including expenses for 
capital projects. The authority of this section may not be used for 
administrative expenses. The authority of this section may be exer- 
cised only until authorizing legislation described in section 1302(c)(1) 
is enacted, or for a period of 24 months after the end of the fiscal 
year for which such authorizing legislation was last enacted, which- 
ever occurs first. Within 60 days after the end of any calendar Reports, 
quarter in which expenditures are made under this section, the 
Commission shall report such expenditures to the appropriate 

I committees of the Congress.". 

Ot)) Conforming Amendments. — (1) The section heading for sec- 
tion 1303 is amended by striking out "Fund" and inserting in lieu 22 USC 3713. 
thereof "Authority". 

i,j (2) The item relating to section 1303 in the table of contents of the 

l ! Panama Canal Act of 1979 is amended by striking out "fund" and 
inserting in lieu thereof "authority". 

I j SEC. 5424. BORROWING AUTHORITY. 

(a) Grant of Authority. — Subchapter I of chapter 3 of title I (22 
I U.S.C. 3711 and following) is amended by adding at the end thereof 
i< the following new section: 

"borrowing AUTHORITY 

L "Sec. 1304. (a) The Panama Canal Commission may borrow from 22 USC 3714. 
I the Treasury, for any of the purposes of the Commission, not more 
than $100,000,000 outstanding at any time. For this purpose, the 
, (Commission may issue to the Secretary of the Treasury its notes or 

I other obligations — 
"(1) which shall have maturities (of not later than December 
I 31, 1999) agreed upon by the Commission and the Secretary of 
the Treasury, and 

"(2) which may be redeemable at the option of the Commis- 
, sion before maturity. 

^! "(b) Amounts borrowed under this section shall not be available 
'! for payments to Panama under Article XIII of the Panama Canal 
I Treaty of 1977. 

\v "(c) Amounts borrowed under this section shall increase the 
j investment of the United States in the Panama Canal, and repay- 
ment of such amounts shall decrease such investment. 

"(d) The Commission shall report to the Congress and to the Office Reports. 
I of Management and Budget on each exercise of borrowing authority 
under this section.". 



I 



101 STAT. 1330-274 PUBLIC LAW 100-203— DEC. 22, 1987 



(b) Conforming Amendment. — The table of contents of the 
Panama Canal Act of 1979 is amended by inserting after the item 
relating to section 1303 the following: 

"1304. Borrowing authority.". 

SEC. 5425. CALCULATION OF INTEREST. 

(a) Calculation of Interest. —Section 1603 (22 U.S.C. 3793) is 
amended — 

(1) in subsection (b)(1)(A), by striking out "appropriations to 
the Commission made on or after the effective date of this Act" 
and inserting in lieu thereof "the Panama Canal Revolving 
Fund,"; 

(2) in subsection (b)(2)(A), by striking out "covered into the 
Panama Canal Commission Fund pursuant to section 1302 of 
this Act" and inserting in lieu thereof "deposited in the Panama 
Canal Revolving Fund"; and 

(3) by adding at the end thereof the following new subsection: 
"(d) The Panama Canal Commission shall pay to the Treasury of 

the United States interest on the investment of the United States, as 
determined under this section. Such interest shall be deposited in 
the general fund of the Treasury.". 

SEC. 5426. PAYMENTS TO THE REPUBLIC OF PANAMA. 

The second sentence of section 1341(e) (22 U.S.C 3751(e)) is 
amended — 

(1) by striking out "and" before "(6)"; and 

(2) by inserting before the period ", and (7) amounts pro- 
grammed to meet working capital requirements". 

SEC. 5427. BASES OF TOLLS. 

Section 1602(b) (22 U.S.C 3792(b)) is amended by inserting "work- 
ing capital," after "depreciation,". 

SEC. 5428. TECHNICAL AND CONFORMING AMENDMENTS. 

(a) Appliances for Employees Injured Before September 7, 
1916.— Section 1246 (22 U.S.C. 3683) is amended by striking out 
"appropriated" and inserting in lieu thereof "available". 

(b) Disaster Relief.— Section 1343 (22 U.S.C. 3753) is amended by 
striking out "available funds appropriated" and inserting in lieu 
thereof "funds available". 

(c) Congressional Restraints on Property Transfers and 
Tax Expenditures.— Section 1344(b)(4) (22 U.S.C. 3754(b)(4)) is 
amended — 

(1) by striking out "appropriated to or" and inserting in lieu 
thereof "available"; and 

(2) by striking out "Panama Canal Commission Fund" and 
inserting in lieu thereof "Panama Canal Revolving Fund". 

(d) Civil Service Retirement and Disabiuty Fund.— Section 
8348(i)(2) of title 5, United States Code, is amended by striking out 
"The Secretary of the Treasury shall pay to the Fund from appro- 
priations" and inserting in lieu thereof "The Panama Canal 
Commission shall pay to the Fund from funds available to it". 

(e) Canal Zone Government Funds. — Section 1301 (22 U.S.C. 
3711) is amended — 

(1) by amending the second sentence to read as follows: "The 
Commission may, to the extent of funds available to it, pay 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-275 



claims or make payments chargeable to such accounts, upon 
proper audit of such claims or payments."; and 
(2) by striking out the third sentence. 

j SEC. 5429. EFFECTIVE DATE. 

! This part and the amendments made by this part take effect on 
j| January 1, 1988. 

Subtitle F — Abandoned Mine Funds in 
Wyoming 

l| SEC. 5501. ALLOCATION OF ABANDONED MINE RECLAMATION FUNDS IN 
WYOMING. 

Notwithstanding any other provision of law, the State of Wyo- 
|| ming may, subject to a plan approved by the Governor, expend not 
more than $2,000,000 from its allocation of fiscal year 1987 appro- 
priated funds under section 402(g) of Public Law 95-87 for direct 
assistance to citizens evacuated from their homes in the Rawhide 
and Horizon Subdivisions in Campbell County, Wyoming, due to 
ji hazards from methane and hydrogen sulfide gases. 
11 

Subtitle G — Nuclear Regulatory Commission 

User Fees 

!,| SEC. 560L USER FEES. 

Section 76010b)(l)(A) of the Consolidated Omnibus Budget Rec- 
onciliation Act of 1985 (Public Law 99-272; 100 Stat. 147) is amended 42 USC 2213. 
by inserting except that for fiscal years 1988 and 1989, such 
percentage shall be increased an additional 6 percent of such costs 
plus all other assessments made by the Nuclear Regulatory Commis- 
sion pursuant to House Joint Resolution 395, 100th Congress, 1st 
Session, as enacted; but in no event shall such percentage be less 
than a total of 45 percent of such costs in each such fiscal year" 
jsj after "with respect to such fiscal year". 

TITLE VI— CIVIL SERVICE AND POSTAL 
SERVICE PROGRAMS 

|| SEC. 6001. PARTIAL DEFERRED PAYMENT OF LUMP-SUM CREDIT FOR 5 USC 8343a 

CERTAIN INDIVIDUALS ELECTING ALTERNATIVE FORMS OF note 
, ANNUITIES. 

(a) In General. — Notwithstanding any other provision of law, and 
except as provided in subsection (c), any lump-sum credit payable to 
an employee or Member pursuant to the election of an alternative 

: form of annuity by such employee or Member under section 8343a or 

I section 8420a of title 5, United States Code, shall be paid in accord- 
ance with the schedule under subsection 0^) (instead of the schedule 
which would otherwise apply), if the commencement date of the 

I annuity payable to such employee or Member occurs after Janu- 

' ary 3, 1988, and before October 1, 1989. 

i (h) Schedule of Payments. — The schedule of payment of any 
I ' lump-sum credit subject to this section is as follows: 



22 USC 3683 
note. 



101 STAT. 1330-276 PUBLIC LAW 100-203— DEC. 22, 1987 



(1) 60 percent of the lump-sum credit shall be payable on the 
date on which, but for the enactment of this section, the full 
amount of the lump-sum credit would otherwise be payable. 

(2) The remainder of the lump-sum credit shall be payable on 
the date which occurs 12 months after the date described in 
paragraph (1). 

An amount payable in accordance with paragraph (2) shall be 
payable with interest, computed using the rate under section 
8334(e)(3) of title 5, United States Code. 
Regulations. (c) EXCEPTIONS. — The Office of Personnel Management shall pre- 

scribe regulations under which this section shall not apply— 

(1) in the case of any individual who is separated from 
Government service involuntarily, other than for cause on 
charges of misconduct or delinquency; and 

(2) in the case of any individual as to whom the application of 
this section would be against equity and good conscience, due to 
a life-threatening affliction or other critical medical condition 
affecting such individual. 

(d) Annuity Benefits Not Affected. — Nothing in this section 
shall affect the commencement date, the amount, or any other 
aspect of any annuity benefits payable under section 8343a or 
section 8420a of title 5, United States Code. 

(e) Definitions.— For purposes of this section, the terms **lump- 
sum credit", "employee and "Member" each has the meaning 
given such term by section 8331 or section 8401 of title 5, United 
States Code, as appropriate. 

39 use 2003 SEC. 6002. CONTRIBUTIONS BY THE UNITED STATES POSTAL SERVICE TO 

note THE CIVIL SERVICE RETIREMENT AND DISABILITY FUND. 

(a) Estabushment of Postal Service Escrow Fund.— There is 
established as a separate account in the United States Treasury, the 
"Postal Service Escrow Fund". Such Fund shall— 

(1) have such amounts described under subsection (b)(2) depos- 
ited no later than October 31, 1988; 

(2) not be available for expenditures of any amounts therein 
during the existence of such Fund; and 

(3) cease to exist on October 1, 1989, and on such date all 
amounts deposited in such Fund under subsection Ot))(2) shall be 
deposited in the Postal Service Fund established under section 
2003 of title 39, United States Code. 

0>) Deposit of Certain Savings in Certain Funds.— 

(1) Fiscal year 1 988.— From all funds available to the United 
States Postal Service in fiscal year 1988, the Postal Service shall 
deposit into the Civil Service Retirement and Disability Fund 
established under section 834^. of title 5, United States Code, an 
amount of $350,000,000 in fiscal year 1988, in addition to any 
amount deposited pursuant to subsection (h) of such section. 

(2) Fiscal year 1989.— From all funds available to the United 
States Postal Service in fiscal year 1989, the Postal Service shall 
deposit into the Postal Service Escrow Fund an amount of 
$465,000,000 no later than October 31, 1988. 

(c) Capital Limitations for Fiscal Years 1988 and 1989.— 

(1) The United States Postal Service may not make any 
commitment or obligation to expend any monies deposited in 
the Postal Service Fund established under section 2003 of title 
39, United States Code, for the capital investment program— 
(A) in excess of $625,000,000 in fiscal year 1988; and 



Copy read "Fund." ". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-277 



(B) in excess of $1,995,000,000 in fiscal year 1989. 
(2) Capital investment programs. — For the purposes of para- 
graph (1) the term "capital investment program" shall include 
all investments in long-term assets and capital investment 
expenditures (including direct and indirect costs associated with 
such investments and expenditures, such as obligations through 
contracts). 

SEC. 6003. CONTRIBUTIONS BY THE UNITED STATES POSTAL SERVICE TO 5 USC 8906 note 
THE EMPLOYEES HEALTH BENEFITS FUND. 

(a) Contributions for Certain Annuitants of the United 
States Postal Service. — As partial payment to the Employees 
Health Benefits Fund established under section 8909 of title 5, 
United States Code, for benefits of certain annuitants and survivor 
annuitants (no portion of the cost of which was paid by the Postal 
Service before the date of enactment of this section) the Postal 
Service shall pay into the Employee Health Benefits Fund 
$160,000,000 in fiscal year 1988, and $270,000,000 in fiscal year 1989 
in addition to any amount deposited into such Fund pursuant to 
section 8906 of such title 5 in each such fiscal year. 

(b) Payment Limitations in Fiscal Years 1988 and 1989.— The 
partial payment required by subsection (a) of this section shall — 

(1) be from all funds available to the United States Postal 
Service in each such fiscal year; 

(2) be from funds representing savings to the United States 
Postal Service resulting from savings from the operating budget 
of the United States Postal Service in each such fiscal year; and 

(3) be paid into such Fund in each such fiscal year, without — 

(A) increasing borrowing under section 2005 of title 39, 
United States Code; 

(B) using any budgetary resources other than budgetary 
resources derived from the operating budget of the United 
States Postal Service; or 

(C) increasing postal rates under chapter 36 of title 39, 
United States Code, 

for the purposes of financing such payment. 

(c) Implementation Plans, Progress Reports, and Compuance 
FOR Fiscal Years 1988 and 1989.— 

(1) Implementation.— No later than March 1, 1988 for fiscal 
year 1988, and October 1, 1988 for fiscal year 1989, the United 
States Postal Service shall — 

(A) formulate an implementation plan specifically 
enumerating the methods by which the Postal Service shall 
make the payments required under subsection (b) and fulfill 
the conditions required under paragraphs (1), (2), and (3) of 
such subsection; and 

(B) submit such plan to the Committee on Governmental 
Affairs of the Senate and the Committee on Post Office and 
Civil Service of the House of Representatives. 

(2) Interim report.— No later than July 15, 1988 for fiscal 
year 1988, and March 1, 1989 for fiscal year 1989, the United 
States Postal Service shall submit an interim report to the 
Committee on Governmental Affairs of the Senate and the 
Committee on Post Office and Civil Service of the House of 
Representatives on the status of meeting the guidelines and 
goals of the plans submitted under paragraph (1)(B), and any 
adjustments necessary to meet the requirements under the 



101 STAT. 1330-278 PUBLIC LAW 100-203— DEC. 22, 1987 



provisions of subsection (b) of this section for each such fiscal i 
year. | 
(3) Preliminary audit and report by the general account- ; 
ING office.— No later than September 1, 1988 for fiscal year » 
1988, and September 1, 1989 for fiscal year 1989, the General ^ 
Accounting Office shall — 

(A) conduct an audit of the plans and adjustments to the \ 
plans submitted by the United States Postal Service under i 
paragraphs (1) and (2) of this subsection and determine the 
extent of compliance of the Postal Service with such plans 
and the requirements of subsection (b) of this section; and I 

(B) submit a report of such audit and determinations to | 
the Committee on Governmental Affairs of the Senate and 
the Committee on Post Office and Civil Service of the House ; 
of Representatives. 

®o (4) Determination of compliance.— On October 31, 1988 ' 
for fiscal year 1988, and on October 31, 1989 for fiscal year 1989, 
the General Accounting Office shall — 

(A) make a final audit and determination of whether the 
United States Postal Service is in compliance with the ! 
requirements of subsection (b) of this section; 

(B) submit a final report for each such fiscal year on such 
compliance to the Committee on Governmental Affairs of 
the Senate and the Committee on Post Office and Civil \ 
Service of the House of Representatives; and 

(C) include in each final report submitted under subpara- 
graph (B), such recommendations (if applicable) for any 3 
actions to enforce compliance with the provisions of subsec- 
tion (b) of this section. ji 

(5) Compliance in fiscal years 1988 and 1989. — Based on the |i 
determination of compliance required by subsection (c)(4) of this i 
section for fiscal years 1988 and 1989, the Congress shall (after 
receiving the recommendation of the General Accounting Office 
under paragraph (4)(C)) determine appropriate action, if nec- 
essary, to enforce compliance with any payment limitation i 
under subsection (b) of this section. 

SEC. 6004. TECHNICAL CLARIFICATION. 

For purposes of section 202 of the Balanced Budget and Emer- 
gency Deficit Reaffirmation Act of 1987, the amendments made by 
this title shall be considered an exception under subsection (b) of 
such section. 

TITLE VII— VETERANS' PROGRAMS 

SEC. 7001. SALES OF VENDEE LOANS WITH OR WITHOUT RECOURSE. | 5, 

Section 1816(d) of title 38, United States Code, is amended— I 

(1) by redesignating paragraph (3) as subparagraph (C); [ 

(2) by inserting after paragraph (2) the following: 

**(3)(A) Before October 1, 1989, notes evidencing such loans may be 
sold with or without recourse as determined by the Administrator, 
with respect to specific proposed sales of such notes, to be in the best 
interest of the effective functioning of the loan guaranty program s jj 
under this chapter, taking into consideration the comparative cost-^ 51 



*° Paragraphs "(4)", "(A)", "(B)", and "(C)", indented wrong. | 

'i Ik 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-279 



effectiveness of each type of sale. In comparing the cost-effectiveness 
of conducting a proposed sale of such notes with recourse or v^ithout 
recourse, the Administrator shall, based on available estimates 
regarding likely market conditions and other pertinent factors as of 
the time of the sale, determine and consider — 

"(i) the average amount by which the selling price for such 
notes sold with recourse would exceed the selling price for such 
notes if sold without recourse; and 

"(ii) the total cost of selling such notes with recourse, 
including — 

"(I) any estimated discount or premium; 
"(II) the projected cost, based on Veterans' Administra- 
tion experience with the sale of notes evidencing vendee 
loans with recourse and the quality of the loans evidenced 
by the notes to be sold, of repurchasing defaulted notes; 

"(III) the total servicing cost with respect to repurchased 
notes, including the costs of taxes and insurance, collecting 
monthly payments, servicing delinquent accounts, and 
terminating insoluble loans; 

"(IV) the costs of managing and disposing of properties 
acquired as the result of defaults on such notes; 

"(V) the loss or gain on resale of such properties; and 
"(VI) any other cost determined appropriate by the 
Administrator. 

"(B) Not later than 60 days after making any sale described in Reports, 
subparagraph (A) of this paragraph occurring before October 1, 
1989, the Administrator shall submit to the Committees on Veter- 
ans' Affairs of the Senate and the House of Representatives a report 
describing — 

"(i) the application of the provisions of such subparagraph, 
and each of the determinations required thereunder, in the case 
of such sale; 

"(ii) the results of the sale in comparison to the anticipated 
results; and 

"(iii) actions taken by the Administrator to facilitate the 
marketing of the notes involved."; and 

(3) in subparagraph (C), as redesignated by clause (1) of this 
section— 

(A) by striking out "The Administrator may sell any note 
securing" and inserting in lieu thereof "Beginning on Octo- 
ber 1, 1989, the Administrator may sell any note evidenc- 
ing"; and 

(B) by redesignating clauses (A) and (B) as clauses (i) and 
. (ii), respectively. 

' SEC. 7002. LOAN FEE EXTENSION. 

Section 1829(c) of title 38, United States Code, is amended by 
^ striking out "1987" and inserting in lieu thereof "1989". 

g i SEC. 7003. CASH SALES OF PROPERTIES ACQUIRED THROUGH FORE- 
f ■ CLOSURES. 

5t i ^ (a) In General.— Section 1816(dXl) of title 38, United States Code, 
B j is amended by striking out "not more than 75 percent, nor less than 
t- ' 60 percent," in the first sentence and inserting in lieu thereof "not 

I more than 65 percent, nor less than 50 percent,". 

(b) Effective Date.— The amendment made by subsection (a) 38 use 1816 

' shall take effect as of October 1, 1987. 



I 



101 STAT. 1330-280 PUBLIC LAW 100-203— DEC. 22, 1987 

SEC. 7004. STATUTORY CONSTRUCTION. 

(a) Statutory Construction for Purposes of the Balanced 
Budget and Emergency Deficit Control Reaffirmation Act of 
1987. —For the purposes of subsections (a) and (b) of section 202 of 
the Balanced Budget and Emergency Deficit Control Reaffirmation 
Act of 1987 (Public Law 100-119), the amendments made by section 
7003 achieve savings made possible by changes in program require- 
ments. 

38 use 1816 (b) Rule for Construction of Dupucate Provisions.— In apply- 

^ ing the provisions of this title and the provisions of the Veterans' 

Home Loan Program Improvements and Property Rehabilitation 
Act of 1987 which make the same amendments as the provisions of 
this title — 

(1) the identical provisions of title 38, United States Code, 
amended by the provisions of this title and the provisions of 
such Act shall be treated as having been amended only once; 
and 

(2) in executing to title 38, United States Code, the amend- ! 
ments made by this title and by such Act, such amendments ' 
shall be executed so as to appear only once in the law. 

TITLE VIII— BUDGET POLICY AND FISCAL 
PROCEDURES 

SEC. 8001. DEFENSE AND DOMESTIC DISCRETIONARY SPENDING LIMITS. 

(a) Aggregate Allocations for Defense. — The levels of budget 
authority and budget outlays for fiscal years 1988 and 1989 for 
major functional category 050 (National Defense) shall be: 

(1) Fiscal year 1988: 

(A) New budget authority, $292,000,000,000. 

(B) Outlays, $285,400,000,000. 

(2) Fiscal year 1989: 

(A) New budget authority, $299,500,000,000. 

(B) Outlays, $294,000,000,000. 

(b) Aggregate Allocations for Domestic Discretionary Spend- 
ing.— The levels of total budget authority and total budget outlays 
for fiscal years 1988 and 1989 for all discretionary spending in « 
categories other than major functional category 050 (National De- 
fense) shall be: 

(1) Fiscal year 1988: 

(A) New budget authority, $162,900,000,000. 

(B) Outlays, $176,800,000,000. 

(2) Fiscal year 1989: 

(A) New budget authority, $166,200,000,000. 

(B) Outlays, $185,300,000,000. 

(c) Fiscal Year 1989 Budget Resolution.— 
(1) House of representatives.— The Committee on the 

Budget of the House of Representatives ® * shall report a concur- 
rent resolution on the budget for fiscal year 1989, pursuant to 
section 301 of the Congressional Budget Act of 1974, in accord- 
ance with the appropriate levels of budget authority and budget 
outlays for major functional category 050 (National Defense) 
* and for all discretionary spending in categories other than 



Copy read "Representative". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-281 



major functional category 050 as set forth in subsections (a)(2) 
and (b)(2). 

(2) Point of order in the senate on aggregate allocations 
for defense and domestic discretionary spending for fiscal 

YEAR 1989.— 

(A) Except as provided in subparagraph (E), it shall not be 
in order in the Senate to consider any concurrent resolution 
on the budget for fiscal year 1989 (including a conference 
report thereon), or any amendment to such a resolution, 
that would fail to be consistent with the allocations in 
subsections (a) and (b) for such fiscal year. 

(B) Subparagraph (A) may be waived or suspended by a 
vote of three-fifths of the Members of the Senate, duly 
chosen and sworn. 

(C) If the ruling of the presiding officer of the Senate 
sustains a point of order raised pursuant to subparagraph ; 
(A), a vote of three-fifths of the Members of the Senate, duly 
chosen and sworn, shall be required to sustain an appeal of 

such ruling. Debate on any such appeal shall be limited to 
two hours, to be equally divided between, and controlled by, 
the Majority and Minority Leaders, or their designees. 

(D) For purposes of this paragraph, the levels of new 
budget authority, spending authority as described in section 
401(c)(2), outlays, and new credit authority for a fiscal year 
shall be determined on the basis of estimates made by the 
Committee on the Budget of the Senate. 

(E) This paragraph shall not apply if a declaration of war 
by the Congress is in effect or if a resolution pursuant to 
section 254(a) of the Balanced Budget and Emergency Defi- 
cit Control Act of 1985 has been enacted. 

(d) Allocations Pursuant to Fiscal Year 1989 Budget Resolu- 
tion. — (1) The allocations required to be included in the joint 
explanatory statement accompanying the conference report on the 
concurrent resolution on the budget for fiscal year 1989, pursuant to 
section 302(a) of the Congressional Budget Act of 1974, shall be 
based upon the levels set forth in subsections (a)(2) and (b)(2) of this 
^ section. 

S|i{ (2) The Committee on Appropriations of each House shall, after 
i f consulting with the Committee on Appropriations of the other 
^ ' House, make the subdivisions required under section 302(b)(1) of the 

Congressional Budget Act of 1974 consistent with the allocations in 

subsections (a)(2) and (b)(2) for fiscal year 1989. 

1 1 SEC. 8002. RESTORATION OF FUNDS SEQUESTERED. 2 USC 902 note. 

j (a) Order Rescinded. — Upon the enactment of this Act and House 
P Joint Resolution 395, 100th Congress,® ^ 1st session, the orders issued 
i by the President on October 20, 1987, and November 20, 1987, 
pursuant to section 252 of the Balanced Budget and Emergency 
e I, Deficit Control Act of 1985 are hereby rescinded. 3 CFR, 1987 

r- !] 0)) Amounts Restored.— Except as otherwise provided in sections Comp., pp. 3ii, 
0 ' 4001, 4041(b), and 4061, any action taken to implement the orders 
i- referred to in subsection (a) shall be reversed, and any sequesterable 
it j resource that has been reduced or sequestered by such orders is 
;i I hereby restored, revived, or released and shall be available to the 



Copy read "Congres". 



101 STAT. 1330-282 PUBLIC LAW 100-203— DEC. 22, 1987 

same extent and for the same purpose as if the orders had not been 
issued. 

SEC. 8003. TECHNICAL AMENDMENTS TO THE CONGRESSIONAL BUDGET 
ACT OF 1974. 

(a) References in Section. — Except as otherwise specifically pro- 
vided, whenever in this section an amendment is expressed in terms 
of an amendment to or repeal of a section or other provision, the 
reference shall be considered to be made to that section or other 
provision of the Congressional Budget and Impoundment Control 
Act of 1974. 

88 Stat. 297. (b) REVISION OF Table OF CONTENTS.— Section Kb) is amended by 

striking "Disapproval of proposed deferrals" and inserting "Pro- 
posed deferrals". 

(c) Redesignation of Subparagraph Headings.— Section 3(7) (as 
amended by section 106(a) of the Balanced Budget and Emergency 

2 use 622. Deficit Control Reaffirmation Act of 1987) is amended by— 

(1) striking section 3(7)(C); 

(2) redesignating section 3(7)(D) as 3(7)(C); 

(3) redesignating section 3(7)(E) as 3(7)(D); 

(4) redesignating section 3(7)(F) as 3(7)(E); 

(5) redesignating section 3(7XG) as 3(7)(F); 

(6) redesignating section 3(7)(H) as 3(7)(G); and 

(7) redesignating section 3(7)(I) as 3(7XH). 

(d) Grammatical Clarification of Section 305(c).— Section 305(c) 
(as amended by section 209 of the Balanced Budget and Emergency 

2 use 636. Deficit Control Reaffirmation Act of 1987) is amended by inserting a 

comma after "therewith". 

(e) Substitution of ''Proposed" for "Made" With Regard to 
Amendments in Committee.— Section 252(c)(2)(F)(ii) of the Balanced 
Budget and Emergency Deficit Control Act of 1985 (as amended by 
section 102(a) of the Balanced Budget and Emergency Deficit Con- 

2 use 902. trol Reaffirmation Act of 1987) is amended by striking "made" and 

inserting "proposed". 

(f) Clarification of Budget Baseune.— Section 251(a)(6)(B) of the 
Balanced Budget and Emergency Deficit Control Act of 1985 (as 
amended by section 102(a) of the Balanced Budget and Emergency 

2 use 901. Deficit Control Reaffirmation Act of 1987) is amended by striking 

out "and" before "contract authority" and by inserting before the 
semicolon at the end thereof the following: ", and that authority to 
provide insurance through the Federal Housing Administration 
Fund is continued". 

1 use 106 note SEC. 8004. PREPARATION OF PRINTED ENROLLED BILL. 

(a) Preparation of Printed Enrollment.— (1) Upon the enact- 
ment of this Act enrolled as a hand enrollment, the Clerk of the 
House of Representatives shall prepare a printed enrollment of this 
Act £is in the case of a bill or joint resolution to which sections 106 
and 107 of title 1, United States Code, apply. Such enrollment 
shall be a correct enrollment of this Act as enrolled in the hand 
enrollment. 

(2) A printed enrollment prepared pursuant to paragraph (1) may, 
in order to conform to customary style for printed laws, include 
corrections in spelling, punctuation, indentation, type face, and type 
size and other necessary stylistic corrections to the hand enrollment. 
Such a printed enrollment shall include notations (in the margins or 
as otherwise appropriate) of all such corrections. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-283 



(b) Transmittal to President. — A printed enrollment prepared 
pursuant to subsection (a) shall be signed by the presiding officers of 
both Houses of Congress as a correct printing of the hand enroll- 
ment of this Act and shall be transmitted to the President. 

(c) Certification by President; Legal Effect. — Upon certifi- 
cation by the President that a printed enrollment transmitted 
pursuant to subsection (b) is a correct printing of the hand enroll- 
ment of this Act, such printed enrollment shall be considered for all 
purposes as the original enrollment of this Act and as valid evidence 
of the enactment of this Act. 

(d) Archives. — A printed enrollment certified by the President 
under subsection (c) shall be transmitted to the Archivist of the 
United States, who shall preserve it with the hand enrollment. In 
preparing this Act for publication in slip form and in the United 
States Statutes at Large pursuant to section 112 of title 1, United 
States Code, the Archivist of the United States shall use the printed 
enrollment certified by the President under subsection (c) in lieu of 
the hand enrollment. 

(e) Hand Enrollment Defined. — As used in this section, the term 
"hand enrollment" means enrollment in a form other than the 
printed form required by sections 106 and 107 of title 1, United 
States Code, as authorized by the joint resolution entitled "Joint 
resolution authorizing the hand enrollment of the budget reconcili- 
ation bill and of the full-year continuing resolution for fiscal year 
1988", approved December 1987 (H.J. Res. 426 of the 100th 
Congress). 

SEC. 8005. ASSET SALES. 

i| In the fiscal year 1989 budget process. Congress commits to pass 
'legislation sufficient to achieve the budget summit agreement of 
$3,500,000,000 of asset sales in fiscal year 1989. 

TITLE IX— INCOME SECURITY AND 
RELATED PROGRAMS 



TABLE OF CONTENTS 
Subtitle A— OASDI Provisions 
Part 1 — Coverage and Benefits 



SSec. 9001. Coverage of inactive duty military training. 

j lSec. 9002. Coverage of all cash pay of agricultural employees whose employers 
spend $2,500 or more a year for agricultural labor. 
Sec. 9003. Coverage of the employer cost of group-term life insurance. 
I Sec. 9004. Coverage of services performed by one spouse in the employ of the other. 
,Sec. 9005. Treatment of service f)erformed by an individual in the employ of a 
parent. 

Sec. 9006. Application of employer taxes to employees' cash tips. 
Sec. 9007. Applicability of Government pension offset to certain Federal employees. 
Sec. 9008. Modification of agreement with Iowa to provide coverage for certain po- 
Hi licemen and firemen. 

|Bec. 9009. Continuation of disability benefits during appeal. 

|!Sec. 9010. Extension of disability re-entitlement period from 15 months to 36 
, months. 

(' Part 2 — Other Social Security Provisions 

Sec. 9021. Moratorium on reductions in attorneys' fees; studies of attorneys' fee 

payment system. 
Sec. 9022. Corporate directors. 
Sec. 9023. Technical corrections. 



101 STAT. 1330-284 



PUBLIC LAW 100-203— DEC. 22, 1987 



Part 3 — Railroad Retirement Program 

Increase in rates of tier 2 Railroad Retirement Tax on employees for 

1988 and thereafter. 
Increase in rates of tier 2 Railroad Retirement Tax on employers for 1988 

and thereafter. 
Commission on Railroad Retirement Reform. 
Transfer to railroad retirement account. 

itle B — Provisions Relating to Public Assistance and Unemployment 
Compensation 

Part 1 — AFDC and SSI Amendments 

Permanent extension of disregard of nonprofit organizations' in-kind 

assistance to SSI and AFDC recipients. 
Fraud control under AFDC program. 

Exclusion of real property when it cannot be sold. ^ 
Adjustment of penalty where asset is transferred for less than fair„ 

market value. 
Exclusion of interest on burial accounts. 

Exception from SSI retrospective accounting for AFDC and certain other 

assistance payments. 
Technical amendment relating to 1986 amendment concerning the treat-; 

ment of certain couples in medical institutions. 
Extension of deadline for disabled widows to apply for Medicaid protec- 
tion under 1984 amendments. 
Increase in SSI emergency advance payments. 
Modification of interim assistance reimbursement program. 
Special notice to blind recipients. 
Rehabilitation services for blind SSI recipients. 

Extending the number of months that an individual in a public emer- 
gency shelter can be eligible for SSI. 
Exclusion of underpayments from resources. 

Continuation of full benefit standard for individuals temporarily institu-f 
tionalized. 

Retention of Medicaid when SSI benefits are lost upon entitlement to 

early widow's or widower's insurance benefits. 
Demonstration program to assist homeless individuals. 
Assistance to homeless AFDC families. 
Increase in personal needs allowance for SSI recipients. 
Exclusion of death benefits to the extent spent on last illness and burial. 
Demonstration of Family Independence Program.*^ 
Child support demonstration program in New York State. 
Technical correction. 

2 — Social Services, Child Welfare Services, and Other Provisions 
Relating to Children 

Permanent extension of authority for voluntary foster care placements. 
2-year extension of foster care ceiling and of authority to transfer foster 

care funds to child welfare services. 
Mother/infant foster care. 

Increased funding for social services block grants. 

Extension of social services block grant and child welfare services pro- 
grams to American Samoa. 
National Commission on Children.*^ 
Boarder babies demonstration project. 

Study of infants and children with AIDS in foster care. ^ 
Technical corrections. 

Part 3— Child Support Enforcement Amendments 

Continuation of child support enforcement services to families no long 
receiving AFDC. 

Child support enforcement services required for certain families rece 
ing Medicaid. 

Sec. 9143. Repeal of unnecessary child support revolving fund. 



Sec. 


9031. 


Sec. 


9032. 


oec. 


i/Uoo. 


Sec. 


9034. 




Subt 




9101 


Sec. 


9102. 


Sec. 


9103. 


Sec. 


9104^ 


Sec. 


9105. 


oec. 


Qi nfi 


Sec. 


9107. 


Sec. 


9108. 


Sec 




Sec. 


9110. 


Sec. 


9111. 


Sec. 


Q1 1 9 


Sec 


9113. 


Sec. 


9114. 


Sec. 


9115. 


Sec. 


9116. 


Sec. 


9117. 


Sec. 


9118. 


l5ec. 


Olio 


Sec. 


9120. 


Sec. 


9121. 


Sec. 


9122! 


Sec. 


Q1 




Part 


Sec. 


9131. 


Sec. 


9132. 


Sec. 9133. 


Sec. 


9134. 


Sec. 


9135. 


Sec. 


9136. 


Sec. 


9137. 


Sec. 


9138. 


Sec. 


9139. 


Sec. 


9141. 


Sec. 9142. 



Copy read "family independence program.". 

Copy read "state. '. 

Copy read "commission on children.". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1830-285 





5ec. 


9303. 




5ec. 


9304. 


■ « 


sec. 


9305. 




3ec. 


9307. 



Part 4 — Unemployment Compensation 

Sec. 9151. Determination of amount of Federal share with respect to certain ex- 
tended benefits payments. 

Sec. 9152. Demonstration program to provide self-employment allowances for eligi- 
ble individuals. 

Sec. 9153. Extension of FUTA tax. 

Sec. 9154. Transfer of funds into the Federal Unemployment Account and the Ex- 
tended Unemployment Compensation Account. 

Sec. 9155. Interest on advances to the Federal Unemployment Account and the Ex- 
tended Unemployment Compensation Account. 

Sec. 9156. Crediting to the Federal Unemployment Account of interest earned on 
advances by the States. 

Subtitle C — Manufacturers Excise Tax on Certain Vaccines 

Sec. 9201. Manufacturers excise tax on certain vaccines. 
Sec. 9202. Vaccine Injury Compensation Trust Fund. 

Subtitle D — Pension Provisions 

Part I — Full-Funding Limitations 

Sec. 9301. Full-funding limitation for deductions to qualified plans. 

Part II— Pension Funding and Termination Requirements 

Sec. 9302. Short title; definitions. 

Subpart A— Additional Funding Requirements 

Additional funding requirements. 
Time for making contributions. 

Liability of members of controlled group for taxes on failure to meet min- 
imum funding standards and to make minimum funding contributions. 
Other funding changes. 

Subpart B— Plant Terminations 

Sec. 9311. Limitations on employer reversions upon plan termination. 

Sec. 9312. Elimination of section 4049 trust: increase in liability to pension benefit 

guaranty corporation and in payments by corporation to participants 

and beneficiaries. 
Sec. 9313. Standards for termination. 

Sec. 9314. Additional amendments relating to plan termination. 

Subpart C — Increase in Premium Rates 
Sec. 9331. Increase in premium rates. 

Subpart D — Miscellaneous Provisions 

Sec. 9341. Security required Uf)on adoption of plan amendment resulting in signifi- 
cant underfunding. 
Sec. 9342. Reporting requirements. 

Sec. 9343. Coordination of provisions of the Internal Revenue Code of 1986 with pro- 
visions of the Employee Retirement Income Security Act of 1974. 

Sec. 9344. Clarification regarding the imposition of an annual sanction for pro- 
hibited transactions which are continuing in nature. 

Sec. 9345. Additional limitations on investment by an individual account plan form- 
ing part of a floor-offset arrangement and on investment by an individ- 
ual account plan in employer stock. 

Sec. 9346. Interest rate on accumulated contributions. 

Subtitle E — Miscellaneous Provisions 
Restoration of trust funds for 1987. 

6-month extension of provisions relating to collection of non-tax debts 
owed to Federal agencies, 
i Sec. 9403. Increase in limit on long-term bonds. 

1 Subtitle F — Customs User Fees; Trade and Customs Authorizations 

I Sec. 9501. Customs user fees. 

Sec. 9502. United States International Trade Commission authorizations. 

Sec. 9503. United States Customs Service ®^ authorizations. 

Sec. 9504. Office of the United States Trade Representative authorizations. 



Copy read "service". 



101 STAT. 1330-286 PUBLIC LAW 100-203— DEC. 22, 1987 



Subtitle A— OASDI Provisions 



PART 1— COVERAGE AND BENEFITS 



42 use 410. 



42 use 409. 



26 use 3121. 



42 use 429. 

26 use 3121 
note. 



SEC. 9001. COVERAGE OF INACTIVE DUTY MILITARY TRAINING. 

(a) Social Security Act Amendments. — (1) Paragraph (1) of sec- 
tion 210(1) of the Social Security Act is amended to read as follows: 

"(1)(1) Except as provided in paragraph (4), the term 'employment' 
shall, notwithstanding the provisions of subsection (a) of this section, 
include — 

"(A) service performed after December 1956 by an individual 
as a member of a uniformed service on active duty, but such 
term shall not include any such service which is performed 
while on leave without pay, and 

"(B) service performed after December 1987 by an individual 
as a member of a uniformed service on inactive duty training.". 
(2) The second indented paragraph following subsection (s) in 
section 209 of such Act (relating to service in the uniformed services) 
is amended by striking "only his basic pay" and all that follows and 
inserting "only (1) his basic pay as described in chapter 3 and section 
1009 of title 37, United States Code, in the case of an individual 
performing service to which subparagraph (A) of such section 
210(1)(1) applies, or (2) his compensation for such service as deter- 
mined under section 206(a) of title 37, United States Code, in the 
case of an individual performing service to which subparagraph (B; 
of such section 210(1)(1) applies.". 

(b) FICA Amendments.— (1) Paragraph (1) of section 3121(m) oi 
the Internal Revenue Code of 1986 (relating to inclusion of service in 
the uniformed services) is amended to read as follows: 

"(1) Inclusion of service. — The term 'employment' shall 
notwithstanding the provisions of subsection (b) of this section 
include — 

"(A) service performed by an individual £is a member of a 
uniformed service on active duty, but such term shall not 
include any such service which is performed while on leav4 
without pay, and [ 
"(B) service performed by an individual as a member of a 
uniformed service on inactive duty training.". 
(2) Paragraph (2) of section 3121(i) of such Code (relating tc 
computation of wages for individuals performing service in the 
uniformed services) is amended by striking "only his basic pay" and 
all that follows and inserting "only (A) his basic pay as described ir 
chapter 3 and section 1009 of title 37, United States Code, in the case 
of an individual performing service to which subparagraph (A) oj 
such subsection (m)(l) applies, or (B) his compensation for sucH 
service as determined under section 206(a) of title 37, United Statee j 
Code, in the case of an individual performing service to whiclj 
subparagraph (B) of such subsection (m)(l) applies.". i 

(c) Conforming Amendment.— Section 229(a) of the Social Secu 
rity Act is amended by striking "section 210(1)" and inserting! 
"210(1)(1)(A)". 

(d) Effective Date.— The amendments made by this section shal r 
apply with respect to remuneration paid after December 31, 1987 



: f 4^ ■ 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-287 



SEC. 9002. COVERAGE OF ALL CASH PAY OF AGRICULTURAL EMPLOYEES 
WHOSE EMPLOYERS SPEND $2,500 OR MORE A YEAR FOR 
AGRICULTURAL LABOR. 

(a) Social Security Act Amendment.— Paragraph (2) of section 

209(h) of the Social Security Act is amended by striking clause (B) 42 USC 409. 
and inserting "(B) the employer's expenditures for agricultural 
labor in such year equal or exceed $2,500;". 

(b) FICA Amendment.— Subparagraph (B) of section 3121(a)(8) of 

the Internal Revenue Code of 1986 (relating to wages) is amended by 26 USC 3121. 
striking clause (ii) and inserting "(ii) the employer's expenditures for 
agricultural labor in such year equal or exceed $2,500;". 

(c) Effective Date. — The amendments made by this section shall 26 USC 3121 
- apply with respect to remuneration for agricultural labor paid after 

" December 31, 1987. 

i SEC. 9003. COVERAGE OF THE EMPLOYER COST OF GROUP-TERM LIFE 
INSURANCE. 

Hi 

iji (a) Coverage Under Old-Age, Survivors, and Disabiuty Insur- 
ANCE Program.— 

rji (1) Social security act amendment.— Clause (3) of section 

209(b) of the Social Security Act is amended by striking "death" 42 USC 409. 
and inserting "death, except that this subsection does not apply 
to a payment for group-term life insurance to the extent that 
such payment is includible in the gross income of the employee 

li under the Internal Revenue Code of 1986". 

(2) FICA AMENDMENT.— Subparagraph (C) of section 3121(a)(2) 
of the Internal Revenue Code of 1986 (relating to wages) is 26 USC 3121. 
amended by striking "death" and inserting "death, except that 
this paragraph does not apply to a payment for group-term life 
insurance to the extent that such payment is includible in the 
gross income of the employee", 
(b) Effective Date. — The amendments made by subsection (a) 26 USC 3121 

;£shall apply with respect to group-term life insurance coverage in 

'reffect after December 31, 1987. 

^SEC. 9004. COVERAGE OF SERVICES PERFORMED BY ONE SPOUSE IN THE 
EMPLOY OF THE OTHER. 

as 

ij (a) Social Security Act Amendments. — 

J (1) In GENERAL.— Subparagraph (A) of section 210(a)(3) of the 

1^ Social Security Act is amended by striking "performed by an 42 USC 410. 

i individual in the employ of his spouse, and service". 
(2) Exception for certain domestic service in the private 
HOME OF A SPOUSE. — Paragraph (3) of section 210(a) of such Act 
is amended by striking so much of subparagraph (B) as precedes 
clause (i) and inserting the following: 

"(B) Service not in the course of the employer's trade or 
business, or domestic service in a private home of the employer, 
performed by an individual in the employ of his spouse or son or 
daughter; except that the provisions of this subparagraph shall 
'J^ not be applicable to such domestic service performed by an 
^ individual in the employ of his son or daughter if — ". 
i|j Ot)) FICA Amendments.— 

9jl (1) In GENERAL.— Subparagraph (A) of section 31210d)(3) of the 

Internal Revenue Code of 1986 (relating to employment) is 26 USC 3121. 
amended by striking "performed by an individual in the employ 
of his spouse, and service". 



101 STAT. 1330-288 PUBLIC LAW 100-203—DEC. 22, 1987 



26 use 3121. (2) Exception for certain domestic service in the private 

HOME OF A SPOUSE —Paragraph (3) of section 3121(b) of such 
Code (relating to employment) is amended by striking so mucb 
of subparagraph (B) as precedes clause (i) and inserting the 
following: 

"(B) service not in the course of the employer's trade oi. 
business, or domestic service in a private home of the employer 
performed by an individual in the employ of his spouse or son 01 
daughter; except that the provisions of this subparagraph shalt 
not be applicable to such domestic service performed by ar 
individual in the employ of his son or daughter if—". 
26 use 3121 (c) Effective Date.— The amendments made by this section shallj 

apply with respect to remuneration paid after December 31, 1987 

SEC. 9005. TREATMENT OF SERVICE PERFORMED BY AN INDIVIDUAL I> 
THE EMPLOY OF A PARENT. 

42 use 410. (a) Social Security Act Amendments.— 

(1) Age below which service for parent is excluded from 
COVERED EMPLOYMENT REDUCED TO AGE 18. — Subparagraph (A) oil 
section 210(a)(3) of the Social Security Act (as amended hy 
section 9004(a)(1) of this Act) is further amended by strikingi 
"twenty-one" and inserting "18". 1 

(2) Exception for certain domestic service in the private 
HOME OF parent. — Subparagraph (B) of section 210(a)(3) of suclj 
Act (as amended by section 9004(a)(2) of this Act) is further 
amended by inserting "under the age of 21 in the employ of hii 
father or mother, or performed by an individual" after "individl 
ual" the first place it appears. 

(b) FICA Amendments. — 

(1) Age below which service for parent is excluded from 

COVERED EMPLOYMENT REDUCED TO AGE 18.— Subparagraph (A) 01 

section 3121(bX3) of the Internal Revenue Code of 1986 (a^ 
amended by section 9004(b)(1) of this Act) is further amended by' 
striking "21" and inserting "18". | 

(2) Exception for certain domestic service in the privateI 
! HOME OF PARENT. — Subparagraph (B) of section 3121(b)(3) of such 

Code (as amended by section 9004(b)(2) of this Act) is further 
amended by inserting "under the age of 21 in the employ of his 
father or mother, or performed by an individual" after "individ- 
ual" the first place it appears. 
26 use 3121 (c) Effective Date. — The amendments made by this section shall 

apply with respect to remuneration paid after December 31, 1987. 



note. 



SEC. 9006. APPLICATION OF EMPLOYER TAXES TO EMPLOYEES* CASH 
TIPS. 

(a) Appucation of Tax to Tips.— Section 3121(q) of the Internal 
26 use 3121. Revenue Code of 1986 (relating to inclusion of tips for employee[ 
taxes) is amended— 

(1) by striking "Employee Taxes" in the heading and insert^? 
ing "Both Employee and Employer Taxes"; ' 

(2) by striking "other than for purposes of the taxes imposed 
by section 3111"; ^ 

(3) by striking "remuneration for employment" and inserting^ 
"remuneration for such employment (and deemed to have been** 
paid by the employer for purposes of subsections (a) and (b) of 
section 3111)"; and ^ 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-289 



(4) by inserting after "at the time received" the following: 
except that, in determining the employer's liability in 
connection with the taxes imposed by section 3111 with respect 
to such tips in any case where no statement including such tips 
was so furnished (or to the extent that the statement so fur- 
nished was inaccurate or incomplete), such remuneration shall 
be deemed for purposes of subtitle F to be paid on the date on 
which notice and demand for such taxes is made to the em- 
ployer by the Secretary". 

(b) Conforming Amendments.— (1) Subsections (a) and (b) of sec- 
tion 3111(a) of such Code (relating to rate of tax on employers) are 26 USC 31 ii. 
each amended by striking "and (t)". 

(2) Section 3121(t) of such Code (relating to special rule) is 
repealed. 

(c) Effective Date. — The amendments made by this section shall 26 USC 3iii 
apply with respect to tips received (and wages paid) on and after 
January 1, 1988. 

SEC. 9007. APPLICABILITY OF GOVERNMENT PENSION OFFSET TO CER- 
TAIN FEDERAL EMPLOYEES. 

(a) Wife's Insurance Benefits. — Paragraph (4) of section 202(b) of 
the Social Security Act is amended— 42 USC 402. 

(1) by redesignating subparagraph (B) as subparagraph (C); 
and 

(2) by striking subparagraph (A) and inserting the following: 
"(A) The amount of a wife's insurance benefit for each month (as 

determined after application of the provisions of subsections (q) and 
(k)) shall be reduced (hut not below zero) by an amount equal to two- 
thirds of the amount of any monthly periodic benefit payable to the 
wife (or divorced wife) for such month which is based upon her 
earnings while in the service of the Federal Government or any 
State (or political subdivision thereof, as defined in section 218(b)(2)) 
if, on the last day she was employed by such entity — 

"(i) such service did not constitute 'employment' as defined in 
section 210, or 

"(ii) such service was being performed while in the service of 
the Federal Government, and constituted 'employment' as so 
defined solely by reason of — 

"(I) clause (ii) or (iii) of subparagraph (G) of section 
210(a)(5), where the lump-sum payment described in such 
clause (ii) or the cessation of coverage described in such 
clause (iii) (whichever is applicable) was received or oc- 
curred on or after January 1, 1988, or 

"(II) an election to become subject to chapter 84 of title 5, 
United States Code, made pursuant to law after Decem- 
f ber 31, 1987, 

unless subparagraph (B) applies. 
The amount of the reduction in any benefit under this subpara- 
graph, if not a multiple of $0.10, shall be rounded to the next higher 
j multiple of $0.10. 

"(B) Subparagraph (A)(ii) shall not apply with respect to monthly 
I periodic benefits based in whole or in part on service which con- 
g j stituted 'emplojnnent' as defined in section 210 if such service was 
A performed for at least 60 months in the aggregate during the period 
ii beginning January 1, 1988, and ending with the close of the first 
calendar month as of the end of which the wife (or divorced wife) is 



19-139 0 - 88 -10 ( 203) 



101 STAT. 1330-290 PUBLIC LAW 100-203— DEC. 22, 1987 



eligible for benefits under this subsection and has made a valic 
application for such benefits.". 

(b) Husband's Insurance Benefits.— Paragraph (2) of sectiorl 
42 use 402. 202(c) of such Act is amended— i 

(1) by redesignating subparagraph (B) as subparagraph (C) ; 
and 

(2) by striking subparagraph (A) and inserting the following 
"(A) The amount of a husband's insurance benefit for each montl- 

(as determined after application of the provisions of subsections (q 
and (k)) shall be reduced (but not below zero) by an amount equal U 
two-thirds of the amount of any monthly periodic benefit payable tc 
the husband (or divorced husband) for such month which is basec 
upon his earnings while in the service of the Federal Government oi 
any State (or political subdivision thereof, as defined in sectiorj 
218(b)(2)) if, on the last day he was employed by such entity—: 
"(i) such service did not constitute 'employment' as defined ir i 
section 210, or , 
"(ii) such service was being performed while in the service o. 
the Federal Government, and constituted 'employment' as so 
defined solely by reason of — o 
"(I) clause (ii) or (iii) of subparagraph (G) of sectior^ 
210(a)(5), where the lump-sum payment described in sucK 
clause (ii) or the cessation of coverage described in sue! 
clause (iii) (whichever is applicable) was received oii 
occurred on or after January 1, 1988, or 

"(II) an election to become subject to chapter 84 of title 5i 
United States Code, made pursuant to law after Decem 
her 31, 1987, 

unless subparagraph (B) applies. i 
The amount of the reduction in any benefit under this subparai 
graph, if not a multiple of $0.10, shall be rounded to the next highe: 
multiple of $0=10. 

"(B) Subparagraph (A)(ii) shall not apply with respect to monthly a 
periodic benefits based in whole or in part on service which con I 
stituted 'employment' as defined in section 210 if such service was » 
performed for at least 60 months in the aggregate during the perioc p( 
beginning January 1, 1988, and ending with the close of the firsii la 
calendar month as of the end of which the husband (or divorcee 
husband) is eligible for benefits under this subsection and has madt 
a valid application for such benefits.". 

(c) Widow's Insurance Benefits. — Paragraph (7) of section 202(e 
of such Act is amended — 

(1) by redesignating subparagraph (B) as subparagraph (C) 
and 

(2) by striking subparagraph (A) and inserting the following 
"(A) The amount of a widow's insurance benefit for each montl 

(as determined after application of the provisions of subsections (q 
and (k), paragraph (2)(D), and paragraph (3)) shall be reduced (bul 
not below zero) by an amount equal to two-thirds of the amount o: 
any monthly periodic benefit payable to the widow (or surviving 
divorced wife) for such month which is based upon her earnings 
while in the service of the Federal Government or any State (of ^ 
political subdivision thereof, as defined in section 2180t))(2)) if, on thi ^ 
last day she was employed by such entity — I ^ 

"(i) such service did not constitute 'employment' as defined ir 
section 210, or ^. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-291 



"(ii) such service was being performed while in the service of 
the Federal Government, and constituted 'employment' as so 
defined solely by reason of — 

"(I) clause (ii) or (iii) of subparagraph (G) of section 
210(a)(5), where the lump-sum payment described in such 
clause (ii) or the cessation of coverage described in such 
clause (iii) (whichever is applicable) was received or 
occurred on or after January 1, 1988, or 

"(II) an election to become subject to chapter 84 of title 5, 
United States Code, made pursuant to law after Decem- 
ber 31, 1987, 

unless subparagraph (B) applies. / 
The amount of the reduction in any benefit under this subpara- 
graph, if not a multiple of $0.10, shall be rounded to the next higher 
-multiple of $0.10. 

"(B) Subparagraph (A)(ii) shall not apply with respect to monthly 
jiperiodic benefits based in whole or in part on service which con- 
"stituted 'employment' as defined in section 210 if such service was 
performed for at least 60 months in the aggregate during the period 
beginning January 1, 1988, and ending with the close of the first 
calendar month as of the end of which the widow (or surviving 
divorced wife) is eligible for benefits under this subsection and has 
made a valid application for such benefits.", 
(d) Widower's Insurance Benefits. — Paragraph (2) of section 
! 202(f) of such Act is amended— 42 USC 402. 

(1) by redesignating subparagraph (B) as subparagraph (C); 
and 

(2) by striking subparagraph (A) and inserting the follov/ing: 
"(A) The amount of a widower's insurance benefit for each month 

s<as determined after application of the provisions of subsections (q) 
jiand (k), paragraph (3)(D), and paragraph (4)) shall be reduced (but 
not below zero) by an amount equal to two-thirds of the amount of 
lany monthly periodic benefit payable to the widower (or surviving 
fidivorced husband) for such month which is based upon his earnings 
iwhile in the service of the Federal Government or any State (or 
political subdivision thereof, as defined in section 218(b)(2)) if, on the 
;last dav he was employed by such entity — 

'(i) such service did not constitute 'employment' as defined in 
section 210, or 

"(ii) such service was being performed while in the service of 
the Federal Government, and constituted 'employment' as so 
defined solely by reason of — 

"(I) clause (ii) or (iii) of subparagraph (G) of section 
210(a)(5), where the lump-sum payment described in such 
clause (ii) or the cessation of coverage described in such 
clause (iii) (whichever is applicable) was received or oc- 
curred on or after January 1, 1988, or 

"(II) an election to become subject to chapter 84 of title 5, 
United States Code, made pursuant to law after Decem- 
ber 31, 1987, 
|i unless subparagraph (B) applies. 
5The amount of the reduction in any benefit under this subpara- 
jgraph, if not a multiple of $0.10, shall be rounded to the next higher 
Imultiple of $0.10. 

"(B) Subparagraph (A)(ii) shall not apply with respect to monthly 
periodic benefits based in whole or in part on service which con- 
stituted 'employment' as defined in section 210 if such service was 



101 STAT. 1330-292 PUBLIC LAW 100-203— DEC. 22, 1987 



performed for at least 60 months in the aggregate during the period 
beginning January 1, 1988, and ending with the close of the first : 
calendar month as of the end of which the widower (or surviving 
divorced husband) is eligible for benefits under this subsection and 
has made a valid application for such benefits.", 
(e) Mother's and Father's Insurance Benefits.— Paragraph (4) j 
42 use 202. of section 202(g) of such Act is amended— 

(1) by redesignating subparagraph (B) as subparagraph (C); 
and 

(2) by striking subparagraph (A) and inserting the following: 
"(A) The amount of a mother s or father's insurance benefit for 

each month (as determined after application of the provisions of 
subsection (k)) shall be reduced (but not below zero) by an amount 
equal to two-thirds of the amount of any monthly periodic benefit i 
payable to the individual for such month which is based upon the j 
individual's earnings while in the service of the Federal Govern 
ment or any State (or political subdivision thereof, as defined in Jsi 
section 218(b)(2)) if, on the last day the individual was employed by 
such entity — 

"(i) such service did not constitute 'employment' as defined in 
section 210, or 

"(ii) such service weis being performed while in the service of 
the Federal Government, and constituted 'employment' as so 
defined solely by reason of — 

"(I) clause (ii) or (iii) of subparagraph (G) of section 
210(a)(5), where the lump-sum payment described in such 
clause (ii) or the cessation of coverage described in such 
clause (iii) (whichever is applicable) was received or oc- 
curred on or after January 1, 1988, or 

"(II) an election to become subject to chapter 84 of title 5, 
United States Code, made pursuant to law after Decem- 
ber 31, 1987, 
unless subparagraph (B) applies. 
The amount of the reduction in any benefit under this subpara- 
graph, if not a multiple of $0.10, shall be rounded to the next higher [Jei 
multiple of $0.10. 

"(B) Subparagraph (A)(ii) shall not apply with respect to monthly 
periodic benefits based in whole or in part on service which con- 
stituted 'employment' as defined in section 210 if such service was 
performed for at least 60 months in the aggregate during the period 
beginning January 1, 1988, and ending with the close of the first 
calendar month as of the end of which the individual is eligible for 
benefits under this subsection and has made a valid application for i^ji 
such benefits.". 

42 use 402 note. (f) EFFECTIVE Date.— The amendments made by this section shall 
apply only with respect to benefits for months after December 1987; 
except that nothing in such amendments shall affect any exemption 
(from the application of the pension offset provisions contained in 
subsection (b)(4), (c)(2), (eX7), (f)(2), or (g)(4) of section 202 of the Social 
Security Act) which any individual may have by reason of subsec- 
tion (g) or (h) of section 334 of the Social Security Amendments of % 
1977. 



42 use 418 note SEC. 9008. MODIFICATION OF AGREEMENT WITH IOWA TO PROVIDE COV- 

ERAGE FOR CERTAIN POLICEMEN AND FIREMEN. 



(a) In General. — Notwithstanding subsection (d)(5)(A) of section 
218 of the Social Security Act and the references thereto in subsec- 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-293 



tions (dXl) and (dX3) of such section 218, the agreement with the 
State of Iowa heretofore entered into pursuant to such section 218 
may, at any time prior to January 1, 1989, be modified pursuant to 
subsection (c)(4) of such section 218 so as to apply to services 
performed in policemen's or firemen's positions required to be cov- 
ered by a retirement system pursuant to section 410.1 of the Iowa 
Code as in effect on July 1, 1953, if the State of Iowa has at any time 
prior to the date of the enactment of this Act paid to the Secretary 
of the Treasury, with respect to any of the services performed in 
such positions, the sums prescribed pursuant to subsection (e)(1) of 
such section 218 (as in effect on December 31, 1986, with respect to 
payments due with respect to wages paid on or before such date). 

(b) Service To Be Covered. — Notwithstanding the provisions of 
subsection (e) of section 218 of the Social Security Act (as so redesig- 
nated by section 9002(c)(1) of the Omnibus Budget Reconciliation Act 
of 1986)), any modification in the agreement with the State of Iowa 
under subsection (a) shall be made effective with respect to — 

(1) all services performed in any policemen's or firemen's 
position to which the modification relates on or after January 1, 
1987, and 

(2) all services performed in such a position before January 1, 
1987, with respect to which the State of Iowa has paid to the 
Secretary of the Treasury the sums prescribed pursuant to 
subsection (e)(1) of such section 218 (as in effect on December 31, 
1986, with respect to payments due with respect to wages paid 
on or before such date) at the time or times established pursu- 
ant to such subsection (e)(1), if and to the extent that — 

(A) no refund of the sums so paid has been obtained, or 

(B) a refund of part or all of the sums so paid has been 
obtained but the State of Iowa repays to the Secretary of 
the Treasury the amount of such refund within 90 days 
after the date on which the modification is agreed to by the 
State and the Secretary of Health and Human Services. 

SEC. 9009. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL. 

Subsection (g) of section 223 of the Social Security Act is 42 USC 423. 
amended — 

(1) in paragraph (IXiii), by striking "June 1988" and inserting 
I "June 1989"; and 

(2) in paragraph (3)(B), by striking "January 1, 1988" and 
inserting "January 1, 1989". 

SEC. 9010. EXTENSION OF DISABILITY RE-ENTITLEMENT PERIOD FROM 15 
MONTHS TO 36 MONTHS. 

' (a) Disability Insurance Benefits.— Paragraph (1) of section 
223(a) of the Social Security Act is amended by striking "15 months" 
md inserting "36 months". 

(b) Child's Insurance Benefits Based on Disability.— Clause (i) 

)f section 202(dXlXG) of such Act is amended by striking "15 42 USC 402. 
nonths" and inserting "36 months". 

(c) Widow's Insurance Benefits Based on Disability.— Par a- 
fraph. (1) of section 202(e) of such Act is amended, in subclause (II) of 
'he last sentence, by striking "15 months" and inserting "36 
nonths". 

' (d) Widower's Insurance Benefits Based on Disability. — Para- 
.n*aph (1) of section 202(f) of such Act is amended, in subclause (II) of 



101 STAT. 1330-294 PUBLIC LAW 100-203— DEC. 22, 1987 



the last sentence, by striking "15 months" and inserting "36 
months", 
(e) Conforming Amendments. — 

(1) Termination of period of disability.— Subparagraph (D) 
42 use 416. of section 216(i)(2) of such Act is amended by striking "15- 
month" and inserting "36-month". 

(2) Termination of benefits during re-entitlement 
42 use 423. period. — Subsection (e) of section 223 of such Act is amended by 

striking "15-month" and inserting "36-month". 

(3) Special Rule for Determination of Continued Medi- 
care Eligibility Based on Entitlement to Disability Bene- 

42 use 426. fits.— Section 226(b) of such Act is amended by adding at the 

end the following new sentence: "In determining when an ■ 
individual's entitlement or status terminates for purposes of the 
preceding sentence, the second sentence of section 223(a) shall 
be applied as though the term *36 months' (in such second 
sentence) read *15 months'.". 

42 use 402 note. (f) EFFECTIVE Date. — The amendments made by this section shall 
take effect January 1, 1988, and shall apply with respect to — 

(1) individuals who are entitled to benefits which are payable 
under subsection (d)(l)(B)(ii), (d)(6)(A)(ii), (d)(6)(B), (e)(l)(B)(ii), or 
(f)(l)(B)(ii) of section 202 of the Social Security Act or subsection 
(a)(1) of section 223 of such Act for any month after December 
1987, and 

(2) individuals who are entitled to benefits which are payable 
under any provision referred to in paragraph (1) for any month 
before January 1988 and with respect to whom the 15-month 
period described in the applicable provision amended by this 
section has not elapsed as of January 1, 1988. 



PART 2— OTHER SOCIAL SECURITY PROVISIONS 

SEC. 9021. MORATORIUM ON REDUCTIONS IN ATTORNEYS' FEES; STUDIES 
OF ATTORNEYS' FEE PAYMENT SYSTEM. 

(a) Moratorium. — (1) The provisions of the memorandum of the 
Associate Commissioner of Social Security dated March 31, 1987 
(relating to revised delegations of authority for administrative law 
judges to determine fees of representatives) which amend sections 
1-220 through 1-226 of the Office of Hearings and Appeals Staff 
Guides and Programs Digest (commonly referred to as the OHA 
Handbook), and Interim Circular No. 122 (relating to the determina- 
tion authority regarding fees for representation of claimants), are 
hereby declared to be null and void. The preceding sentence shall 
apply with respect to all attorneys' fees finally authorized in connec- 
tion with claims for benefits under title II of the Social Security Act 
on and after the date of the enactment of this Act, regardless of 
when the legal services involved were performed; and no reconsider- 
ation of any such fee finally authorized prior to that date shall be 
required. 

(2) Until July 1, 1989, neither the Secretary nor the Social Secu- 
rity Administration may modify any of the rules and regulations 
relating to attorneys' fees in connection with claims for benefits 
under title II of the Social Security Act. 



Copy read "For' 



I 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-295 



(b) Studies. — (1) The Secretary of Health and Human Services 
shall conduct a study of the attorneys' fee payment process under 
title II of the Social Security Act, Such study shall — 

(A) assess the levels of reimbursement to attorneys, giving 
consideration to the contingent nature of most arrangements 
between claimants and their legal representatives, and propose 
alternative methods for establishing fees which take the nature 
of these arrangements into account, and 

(B) suggest changes aimed at eliminating unnecessary delays 
in the approval and payment of attorneys' fees and thereby 
streamlining the payment process. 

In conducting this study, the Secretary shall consult with individ- 
uals who represent the views of attorneys and with others who 
represent the views of claimants. 

(2) At the same time, the Comptroller General shall conduct a 
|istudy of the fee approval system, including at a minimum — 

(A) a study of the impact of the current system on claimants 
and attorneys, 

(B) an identification of obstacles to the timely payment of 
attorneys' fees under present law, and 

(C) an assessment of the effect, if any, which the reduced limit 
on attorneys' fees in effect immediately prior to the enactment 
of this Act has had on access to legal representation by 

, applicants for disability insurance benefits. 
I (3) The studies required by paragraphs (1) and (2), along with any 
^recommendations resulting therefrom, shall be submitted to the 
Congress no later than July 1, 1988. 

|SEC. 9022. CORPORATE DIRECTORS. 

(a) Social Security Act Amendment. — Section 211(a) of the 
Social Security Act is amended by adding at the end thereof the 42 USC 411. 
1 following new paragraph: 

j 'Any income of an individual which results from or is attributable 
to the performance of services by such individual as a director of a 
corporation during any taxable year shall be deemed to have been 
derived (and received) by such individual in that year, at the time 
the services were performed, regardless of when the income is 
actually paid to or received by such individual (unless it was actu- 
ally paid and received prior to that year).". 

i (b) SECA Amendment.— Section 1402(a) of the Internal Revenue 

Code of 1986 (relating to definition of net earnings from self-employ- 26 USC 1402. 

ment) is amended by adding at the end thereof the following new 

paragraph: 

'Any income of an individual which results from or is attributable 
to the performance of services by such individual as a director of a 
Incorporation during any taxable year shall be deemed to have been 
derived (and received) by such individual in that year, at the time 
the services were performed, regardless of when the income is 
actually paid to or received by such individual (unless it was actu- 
'ally paid and received prior to that year).". 

(c) Effective Date. — The amendments made by this section shall 
apply with respect to services performed in taxable years beginning 
|Dn or after January 1, 1988. 

ISEC. 9023. TECHNICAL CORRECTIONS. 

! (a) The heading of section 210(p) of the Social Security Act is 42 USC 410. 
iamended to read as follows: 



i 

I: 



101 STAT. 1330-296 PUBLIC LAW 100-203— DEC. 22, 1987 



"Medicare Qualified Government Employment". 

42 use 411. (b)(1) Section 211(a)(7) of such Act is amended— 

(A) by inserting "and" before "section 911"; and 

(B) by striking "and section 931 (relating to income from 
sources within possessions of the United States) of the Internal 
Revenue Code of 1954". 

(2) Section 211(a)(8) of such Act is amended to read as follows: 
"(8) The exclusion from gross income provided by section 931 
of the Internal Revenue Code of 1986 shall not apply;". 
42 use 418. (c) Section 218(v) of such Act is amended— 

(1) by striking "(v)" and inserting "(n)"; 

(2) by striking paragraph (3); and 

(3) by redesignating paragraphs (4) and (5) as paragraphs (3) 
and (4), respectively. 

26 use 3121. (d) Section 3121(a)(5) of the Internal Revenue Code of 1986 is 

amended — 

(1) by striking "; or" at the end of subparagraph (F) and 
inserting ", or"; and 

(2) by striking the comma at the end of subparagraph (G) and 
inserting a semicolon. 

PART 3— RAILROAD RETIREMENT PROGRAM 

SEC. 9031. INCREASE IN RATES OF TIER 2 RAILROAD RETIREMENT TAX 
ON EMPLOYEES FOR 1988 AND THEREAFTER. 

(a) In General. — Subsection (b) of section 3201 of the Internal 
Revenue Code of 1986 (relating to tier 2 employee tax) is amended to 
read as follows: 

"(b) Tier 2 Tax. — In addition to other taxes, there is hereby 
imposed on the income of each employee a tax equal to 4.90 percent 
of the compensation received during any calendar year by such 
employee for services rendered by such employee.". 
26 use 3201 (b) Effective Date. — The amendment made by this section shall 

apply with respect to compensation received after December 31, 
1987. 



note. 



SEC. 9032. INCREASE IN RATES OF TIER 2 RAILROAD RETIREMENT TAX 
ON EMPLOYERS FOR 1988 AND THEREAFTER. 

(a) In General. — Subsection (b) of section 3221 of the Internal 
Revenue Code of 1986 (relating to tier 2 employer tax) is amended to 
read as follows: 

"(b) Tier 2 Tax. — In addition to other taxes, there is hereby 
imposed on every employer an excise tax, with respect to having 
individuals in his employ, equal to 16.10 percent of the compensa- 
tion paid during any calendar year by such employer for services 
rendered to such employer.". 
26 use 3221 (b) Effective Date. — The amendments made by this section shall 

apply with respect to compensation paid after December 31, 1987. 

45 use 231n SEC. 9033. COMMISSION ON RAILROAD RETIREMENT REFORM. 

note. 

(a) Commission on Railroad Retirement Reform. — There is 
established a commission to be known as the Commission on 
Railroad Retirement Reform (in this section referred to as the 
* 'Commission"). 

(b) Study.— The Commission shall conduct a comprehensive study 
of the issues pertaining to the long-term financing of the railroad 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-297 



letirement system (in this section referred to as the "system") and 
he system's short-term and long-term solvency. The Commission Reports, 
hall submit a report containing a detailed statement of its findings 
md conclusions together with recommendations to the Congress for 
evisions in, or alternatives to, the current system to assure the 
irovision of retirement benefits to former, present, and future 
ailroad employees on an actuarially sound basis. The study will 
ake into account — 

(1) the possibility of restructuring the financing of railroad 
retirement benefits through increases in the tier 2 tax rate, 
increases in the tier 2 tax wage base, the imposition of a tax on 
operating revenues, revisions in the investment policy of the 
railroad retirement pension fund, and establishing a privately 
funded and administered railroad industry pension plan; 

(2) the economic outlook for the railroad industry, and the 
nature of the relationships between the railroad retirement 
system, levels of railroad employment and compensation, and 
the performance of the rail sector; 

(3) the ability of the system under current law to pay benefits 
to current and future retirees and other beneficiaries; 

(4) the financial relationship of the system to the railroad 
unemployment insurance system, the social security system, 

' and the General Fund; and 

(5) any other matters which the Commission considers would 
be necessary, appropriate, or useful to the Congress in develop- 

■ ing legislation to reform the system. 

(c) Membership of the Commission.— 
'j (1) Number and appointment. — The Commission shall be 
composed of seven members, as follows: 

(A) four individuals appointed by the President— President of U.S. 

(i) one of whom shall be appointed on the basis of 
recommendations made by representatives of em- 
ployers (as defined in section 1(a) of the Railroad 
Retirement Act of 1974) so as to provide representation 
on the Commission satisfactory to the largest number 
of employers concerned, 

(ii) one of whom shall be appointed on the basis of 
recommendations made by representatives of em- 
ployees (as defined in section 1(b) of the Railroad 
Retirement Act of 1974) so as to provide representation 
on the Commission satisfactory to the largest number 
of employees concerned, 

(iii) one of whom shall be appointed on the basis of 
recommendations made by representatives of com- 
muter railroads, and 

(iv) one of whom shall be appointed from members of 
the public; 

(B) one individual appointed by the Speaker of the House 
of Representatives from among members of the public; 

(C) one individual appointed by the President pro tem- 
pore of the Senate from among members of the public; and 

(D) one individual appointed by the Comptroller General 
from among members of the public with expertise in the 
fields of retirement systems and pension plans. 

All public members of the Commission shall be appointed from 
among individuals who are not in the employment of and are 
not pecuniarily or otherwise interested in any employer (as so 



101 STAT. 1330-298 PUBLIC LAW 100-203— DEC. 22, 1987 



President of U.S. defined) or organization of employees (as so defined). In making 
appointments under this section, the President, the Speaker ol 
the House of Representatives, and the President pro tempore ol 
the Senate shall ensure that the members of the Commission 
collectively, possess special knowledge of retirement income* 
policy, social insurance, private pensions, taxation, and the 
structure of the transportation industry. A vacancy in the 
Commission shall be filled in the manner in which the original 
appointment was made. 

(2) Pay.— Members of the Commission shall serve withoui 
compensation, but shall be reimbursed for travel, subsistences 
and other necessary expenses incurred in the performance oi^ 
their duties as members of the Commission. I 

(3) Quorum. — Five members of the Commission shall con, 
stitute a quorum but a lesser number may hold hearings 

(4) Chairman. — The members of the Commission shall elect £ 
Chairman from among the membership. 

(d) Staff of Commission; Experts and Consultants.— 

(1) Staff. — Subject to such rules as may be prescribed by th( 
Commission, the Chairman may appoint and fix the pay of sue! 
personnel as the Chairman considers appropriate. 

(2) Applicability of certain civil service laws.— The staf 
of the Commission may be appointed without regard to th( 
provisions of title 5, United States Code, governing appoint 
ments in the competitive service, and may be paid withoui 
regard to the provisions of chapter 51 and subchapter III o:^ 
chapter 53 of such title relating to classification and Genera^ 
Schedule pay rates, except that no individual so appointed maj 
receive pay in excess of the annual rate of basic pay payable foi 
GS-18 of the General Schedule. 

(3) Experts and consultants.— Subject to such rules as ma^ 
be prescribed by the Commission, the Chairman may procur 
temporary and intermittent services under section 310903) ol 
title 5 of the United States Code, but at rates for individuals nol 
to exceed the daily equivalent of the maximum annual rate ol 
basic pay payable for GS-18 of the General Schedule. 

(4) Staff of federal agencies. — Upon request of th^ 
Commission, the Railroad Retirement Board and any othei 
Federal agency may detail, on a reimbursable basis, any of thi^ 
personnel thereof to the Commission to assist the Commissior 
in carrying out its duties under this section. ^ 

(e) Access to Official Data and Services.— 

(1) Official data. — The Commission may, as appropriate-j 
secure directly from any department or agency of the Unitec 
States information necessary to enable it to carry out this 
section. Upon request of the Chairman of the Commission, the 
head of such department or agency shall, as appropriate, furj* 
nish such information to the Commission. , 

(2) Mails.— The Commission may use the United States mails 
in the same manner and under the same conditions as other 
departments and agencies of the United States. 

(3) Administrative support services.— The Administrator ol, 
General Services shall provide to the Commission on a re-, 
imbursable basis such administrative support services as the, 

* Commission may request. 

(f) Report. — The Commission shall transmit a report to the Presi-^ 
dent and to each House of the Congress not later than October 1^, 



Copy read "chairman". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-299 

■1989. The report shall contain a detailed statement of the findings 
and conclusions of the Commission, together with its legislative 
recommendations, 
(g) Termination. — The Commission shall cease to exist 60 days 

: after submitting its report pursuant to subsection (f). 

^ (h) Authorization of Appropriations. — There is authorized to be 
appropriated the sum of $1,000,000 for purposes of this section, to 
remain available until expended but in no event beyond the date of 

.^Germination provided in subsection (g). 

SEC. 9034. TRANSFER TO RAILROAD RETIREMENT ACCOUNT. 

Subsection (c)(1)(A) of section 224 of the Railroad Retirement 
Solvency Act of 1983 (relating to section 72(r) revenue increase 45 USC 23in 
transferred to certain railroad accounts) is amended — 

•| (1) by inserting "(other than amounts described in subpara- 

^ graph (B))" after "amounts"; 

(2) by striking "1988" and inserting "1989"; and 

(3) by striking the last sentence. 

Subtitle B — Provisions Relating to Public 
- Assistance and Unemployment Compensation 

PART 1— AFDC AND SSI AMENDMENTS 

^5EC. 9101. PERMANENT EXTENSION OF DISREGARD OF NONPROFIT 
^ ORGANIZATIONS' IN-KIND ASSISTANCE TO SSI AND AFDC 

|H RECIPIENTS. 

Effective as of October 1, 1987, section 2639(d) of the Deficit Effective date, 
.^eduction Act of 1984 is amended by striking "; but" and all that 42 USC 602 note. 
Ej'ollows and inserting a period. 

j5EC. 9102. FRAUD CONTROL UNDER AFDC PROGRAM. 

]( (a) In General.— Part A of title IV of the Social Security Act is 
amended by adding at the end the following new section: 

I "fraud control 

"Sec. 416. (a) Any State, in the administration of its State plan 42 USC 616. 
' approved under section 402, may elect to establish and operate a 
raud control program in accordance with this section. 
"(b) Under any such program, if an individual who is a member of 
J^i family applying for or receiving aid under the State plan approved 
^: jinder section 402 is found by a Federal or State court or pursuant to 
'lin administrative hearing meeting requirements determined in 
regulations of the Secretary, on the basis of a plea of guilty or nolo 
contendere or otherwise, to have intentionally — 

"(1) made a false or misleading statement or misrepresented, 
concealed, or withheld facts, or 

"(2) committed any act intended to mislead, misrepresent, 
conceal, or withhold facts or propound a falsity, 
'jot the purpose of establishing or maintaining the family's eligibility 
5or aid under such State plan or of increasing (or preventing a 
'"^eduction in) the amount of such aid, then the needs of such 
ndividual shall not be taken into account in making the determina- 
ion under section 402(aX7) with respect to his or her family (A) for a 
♦eriod of 6 months upon the first occasion of any such offense, (B) for 



101 STAT. 1330-300 PUBLIC LAW 100-203— DEC. 22, 1987 



a period of 12 months upon the second occasion of any such offense, 
and (C) permanently upon the third or a subsequent occasion of any 
such offense. 

"(c) The State agency involved shall proceed against any individ- 
ual alleged to have committed an offense described in subsection (b) 
either by way of administrative hearing or by referring the matter 
to the appropriate authorities for civil or criminal action in a court 
of law. The State agency shall coordinate its actions under this 
section with any corresponding actions being taken under the food 
stamp program in any case where the factual issues involved arise 
from the same or related circumstances. 

"(d) Any period for which sanctions are imposed under subsection 
(b) shall rem.ain in effect, without possibility of administrative stay, 
unless and until the finding upon which the sanctions were imposed 
is subsequently reversed by a court of appropriate jurisdiction; but 
in no event shall the duration of the period for which such sanctions 
are imposed be subject to review. 

"(e) The sanctions provided under subsection (b) shall be in addi- 
tion to, and not in substitution for, any other sanctions which may 
be provided for by law with respect to the offenses involved. 

"(0 Each State which has elected to establish and operate a fraud 
control program under this section must provide all applicants for 
aid to families with dependent children under its approved State 
plan, at the time of their application for such aid, with a written 
notice of the penalties for fraud which are provided for under this 
section.". 

42 use 602. (b) State Plan Requirement.— Section 402(a) of such Act is 

amended — 

(1) by striking "and" after the semicolon at the end of para- 
graph (38); 

(2) by striking the period at the end of paragraph (39) and 
inserting "; and"; and 

(3) by inserting immediately after paragraph (39) the follow- 
ing new paragraph: 

"(40) provide, if the State has elected to establish and operate 
a fraud control program under section 416, that the State will 
submit to the Secretary (with such revisions as may from time 
to time be necessary) a description of and budget for such 
program, and will operate such program in full compliance with 
that section.". 

42 use 603. (c) Federal Matching.— Section 403(a)(3) of such Act is 

amended — 

(1) by striking "and" after the final comma in subpara- 
graph (B); 

(2) by redesignating subparagraph (C) as subparagraph (D); 

(3) by inserting after subparagraph (B) the following new 
subparagraph: 

"(C) 75 percent of so much of such expenditures as are for 
the costs of carrying out a fraud control program under 
section 416, including cost^ related to the investigation, 
prosecution, and administrative hearing of fraudulent cases 
and the making of any resultant collections, and"; and 

(4) by striking "(C)" in the matter following subparagraph (D) 
(as redesignated by paragraph (2) of this subsection) and 
inserting "(D)". 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-301 



®® (d) Effective Date. — The amendments made by this section 42 USC 602 note, 
shall become effective April 1, 1988. 

SEC. 9103. EXCLUSION OF REAL PROPERTY WHEN IT CANNOT BE SOLD. 

(a) In General.— Section 1613(b) of the Social Security Act is 42 USC 1382b. 
amended — 

(1) by inserting "(1)" after "(b)"; and 

(2) by adding at the end the following new paragraph: 

"(2) Notwithstanding the provisions of paragraph (1), the Sec- 
retary shall not require the disposition of any real property for so 
long as it cannot be sold because (A) it is jointly owned (and its sale 
would cause undue hardship, due to loss of housing, for the other 
owner or owners), (B) its sale is barred by a legal impediment, or (C) 
as determined under regulations issued by the Secretary, the 
owner's reasonable efforts to sell it have been unsuccessful.". 

(b) Effective Date. — The amendments made by subsection (a) 
shall become effective April 1, 1988. 

SEC. 9104. ADJUSTMENT OF PENALTY WHERE ASSET IS TRANSFERRED 
FOR LESS THAN FAIR MARKET VALUE. 

®^ (a) In General.— Section 1613(c) of the Social Security Act is 
amended — 

(1) by inserting immediately after "the exclusions under 
subsection (a)" in paragraph (1) the following: ", and subject to 
paragraph (4) of this subsection"; and 

(2) by adding at the end the following new paragraph: 
"(4) The Secretary shall by regulation provide for suspending the 

application of paragraph (1) to the extent (in any instance) that the 
Secretary determines that such suspension is necessary to avoid 
undue hardship.". 

(b) Effective Date. — The amendments made by subsection (a) 
shall become effective April 1, 1988. 



42 USC 1382b 
note. 



Regulations. 



42 USC 1382b 
note. 



SEC. 9105. EXCLUSION OF INTEREST ON BURIAL ACCOUNTS. 

(a) In General.— Section 1613(d) of the Social Security Act is 
amended — 

(1) in paragraph (1), by striking "if the inclusion" and all that 
follows and inserting a period; and 

(2) in paragraph (3), by striking "aside" and inserting "aside 
in cases where the inclusion of any portion of the amount would 
cause the resources of such individual, or of such individual and 
spouse, to exceed the limits specified in paragraph (1) or (2) 
(whichever may be applicable) of section 1611(a)' . 

(b) Effective Date. — The amendments made by subsection (a) 
shall become effective April 1, 1988. 

SEC. 9106, EXCEPTION FROM SSI RETROSPECTIVE ACCOUNTING FOR 
AFDC AND CERTAIN OTHER ASSISTANCE PAYMENTS. 

(a) In General.— Section 1611(c) of the Social Security Act is 42 USC 1882. 
amended — 

(1) by striking "paragraphs (2), (3), and (4)" in paragraph (1) 
and inserting "paragraphs (2), (3), (4), and (5)"; 

(2) by redesignating paragraphs (5) and (6) as paragraphs (6) 
and (7), respectively; and 



42 USC 1382b 
note. 



®* Copy read "Effective Date. 
Copy read "In General.—", 



101 STAT. 1330-302 



PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1382 
note. 



Effective date. 
42 use 1382. 



Effective date. 
42 use 1383c. 



42 use 1383. 



42 use 1383 
note. 



(3) by inserting after paragraph (4) the following new para- 
graph: 

"(5) Notwithstanding paragraphs (1) and (2), any income which is 
paid to or on behalf of an individual in any month pursuant to (A) a 
State plan approved under part A of title IV of this Act (relating to 
aid to families with dependent children), (B) section 472 of this Act 
(relating to foster care assistance), (C) section 412(e) of the Immigra- 
tion and Nationality Act (relating to assistance for refugees), (D) 
section 501(a) of Public Law 96-422 (relating to assistance for Cuban 
and Haitian entrants), or (E) the Act of November 2, 1921 (42 Stat. 
208), as amended (relating to assistance furnished by the Bureau of 
Indian Affairs), shall be taken into account in determining the 
amount of the benefit under this title of such individual (and his 
eligible spouse, if any) only for that month, and shall not be taken 
into account in determining the amount of the benefit for any other 
month.". 

(b) Effective Date. — The amendments made by subsection (a) 
shall become effective April 1, 1988. 

SEC. 9107. TECHNICAL AMENDMENT RELATING TO 1986 AMENDMENT 
CONCERNING THE TREATMENT OF CERTAIN COUPLES IN 
MEDICAL INSTITUTIONS. 

Effective November 10, 1986, section 1611(e)(5) of the Social Secu- 
rity Act is amended — 

(1) by striking "sharing a room or comparable accommodation 
in a hospital, home, or facility" and inserting "living in the 
same hospital, home, or facility and 

(2) by striking "shared such a room or accommodation" and 
inserting "lived in the same such hospital, home, or facility". 

SEC. 9108. EXTENSION OF DEADLINE FOR DISABLED WIDOWS TO APPLY 
FOR MEDICAID PROTECTION UNDER 1984 AMENDMENTS. 

Effective July 1, 1987, section 1634(b)(3) of the Social Security Act 
is amended by striking "during the 15-month period beginning with 
the month in which this subsection is enacted" and inserting "no 
later than July 1, 1988". 

SEC. 9109. INCREASE IN SSI EMERGENCY ADVANCE PAYMENTS. 

(a) In General.— Section 1631(aX4)(A) of the Social Security Act is 
amended by striking "a cash advance against such benefits in an 
amount not exceeding $100" and inserting "a cash advance against 
such benefits, including any federally-administered State supple- 
mentary payments, in an amount not exceeding the monthly 
amount that would be payable to an eligible individual with no 
other income for the first month of such presumptive eligibility". 

(b) Effective Date. — The amendment made by subsection (a) 
shall become effective on the date of the enactment of this Act. 

SEC. 91 iO. MODIFICATION OF INTERIM ASSISTANCE REIMBURSEMENT 
PROGRAM. 

(a) In General.— The first sentence of section 1631(gX2) of the 
Social Security Act is amended by striking "at the time the Sec- 
retary makes the first payment of benefits" and inserting "at the 
time the Secretary makes the first payment of benefits with respect 
to the period described in clause (A) or (B) of paragraph (3)". 

(b) Definition of Interim Assistance.— Section 1631(gX3) of such 
Act is amended — 



PUBLIC LAW 100-203— DEC. 22, 1987 



101 STAT. 1330-303 



(1) by inserting ''(A)" after "basic needs"; and 

(2) by inserting before the period at the end the following: 
or (B) during the period beginning with the tirst month for 

which the individual's benefits (as defined in paragraph (2)) 
have been terminated or suspended if the individual was subse- 
quently found to have been eligible for such benefits", 
(c) Effective Date. — The amendments made by this section shall 
become effective with the 13th month following the month in which 
this Act is enacted, or, if sooner, with the first month for which the 
Secretary of Health and Human Services determines that it is 
administratively feasible. 

SEC. 9111. SPECIAL NOTICE TO BLIND RECIPIENTS. 

(a) In General. — (1) Section 1631 of the Social Security Act is 
amended by adding at the end the following new subsection: 



42 use 1383 
note. 



42 use 1383. 



"Special Notice to Blind Individuals with Respect to Hearings and 
Other Official Actions 

"(1X1) In any case where an individual who is applying for or 
receiving benefits under this title on the basis of blindness is 
entitled (under subsection (c) or otherwise) to receive notice from the 
Secretary of any decision or determination made or other action 
taken or proposed to be taken with respect to his or her rights under 
this title, such individual shall at his or her election be entitled 
either (A) to receive a supplementary notice of such decision, deter- 
mination, or action, by telephone, within 5 working days after the 
initial notice is mailed, (B) to receive the initial notice in the form of 
a certified letter, or (C) to receive notification by some alternative 
procedure established by the Secretary and agreed to by the individ- 
ual. 

"(2) The election under paragraph (1) may be made at any time; 
but an opportunity to make such an election shall in any event be 
given (A) to every individual who is an applicant for benefits under 
this title on the basis of blindness, at the time of his or her 
application, and (B) to every individual who is a recipient of such 
benefits on the basis of blindness, at the time of each redetermina- 
tion of his or her eligibility. Such an election, once made by an 
individual, shall apply with respect to all notices of decisions, deter- 
minations, and actions which such individual may thereafter be 
entitled to receive under this title until such time as it is revoked or 
changed.". 

(2) Not later than one year after the date on which the amend- 
ment made by paragraph (1) becomes effective, the Secretary of 
Health and Human Services shall provide every individual receiving 
benefits under title XVI of the Social Security Act on the basis of 
blindness an opportunity to make an election under section 
1631(1X1) of such Act (as added by such amendment). 

(b) Study.— The Secretary of Health and Human Services shall 
study the desirability and feasibility of extending special or supple- 
mentary notices of the type provided to blind individuals by section 
1631(1) of the Social Security Act (as added by subsection (a) of this 
section) to other individuals who may lack the ability to read and 
comprehend regular written notices, and shall report the results of 
such study to the Congress, along with such recommendations as 
may be appropriate, within 12 months after the date of the enact- 
ment of this Act. 



42 use 1383 
note. 



Reports. 

42 use 1383 

note. 



101 STAT. 1330-304 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1383 
note. 



42 use 1383. 



42 use 1383 
note. 



42 use 1382. 



42 use 1382 
note. 



42 use 1382b. 



42 use 1382b 
note. 



(c) Effective Date. — The amendment made by subsection (a) shall 
become effective July 1, 1988. 

SEC. 9112. REHABILITATION SERVICES FOR BLIND SSI RECIPIENTS. 

(a) In General.— Section 1631(a)(6) of the Social Security Act is 
amended — 

(1) by inserting "blindness (as determined under section 
1614(a)(2)) or" before "disability (as determined under section 
1614(a)(3))"; 

(2) by inserting "blindness or other" before "physical or 
mental impairment"; and 

(3) by inserting "blindness and" before "disability benefit 
rolls" in subparagraph (B). 

(b) Effective Date. — The amendments made by subsection (a) 
shall become effective April 1, 1988. 

SEC. 9113. EXTENDING THE NUMBER OF MONTHS THAT AN INDIVIDUAL 
IN A PUBLIC EMERGENCY SHELTER CAN BE ELIGIBLE FOR 
SSL 

(a) In General.— Section 1611(e)(1)(D) of the Social Security Act is 
amended by striking "three months in any 12-month period" and 
inserting "6 months in any 9-month period". 

(b) Effective Date. — (1) The amendment made by subsection (a) 
shall become effective January 1, 1988. 

(2) In the application of section 1611(e)(1)(D) of the Social Security 
Act on and after the effective date of such amendment, months 
before January 1988 in which a person was an eligible individual or 
eligible spouse by reason of such section shall not be taken into 
account. 

SEC. 9114. EXCLUSION OF UNDERPAYMENTS FROM RESOURCES. 

(a) In General. — Section 1613(a)(7) of the Social Security Act is 
amended by inserting after "shall be limited to the first 6 months 
following the month in which such amount is received" the follow- 
ing: "(or to the first 9 months following such month with respect to 
any amount so received during the period beginning October 1, 1987, 
and ending September 30, 1989)". 

(b) Effective Date.— The amendment made by subsection (a) 
shall become effective January 1, 1988. 

SEC. 9115. CONTINUATION OF FULL BENEFIT STANDARD FOR INDIVID- 
UALS TEMPORARILY INSTITUTIONALIZED. 

(a) In General. — Section 1611(e)(1) of the Social Security Act is 
amended — 

(1) in subparagraph (A), by striking "and (E)" and inserting 
"(E), and (G)"; 

(2) in subparagraph (B), by inserting "(subject to subpara- 
graph (G))" after "throughout any month"; and 

(3) by adding at the end the following new subparagraphs: 
"(G) A person may be an eligible individual or eligible spouse for 

purposes of this title, and subparagraphs (A) and (B) shall not apply, 
with respect to any particular month throughout which he or she is 
an inmate of a public institution the primary purpose of which is the 
provision of medical or psychiatric care, or which is a hospital, 
extended care facility, nursing home, or intermediate care facility 
receiving payments (with respect to such individual or spouse) under 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-305 



a State plan approved under title XIX, if it is determined in 
accordance with subparagraph (H) that — 

"(i) such person's stay in that institution or facility (or in that 
institution or facility and one or more other such institutions or 
facilities during a continuous period of institutionalization) is 
likely (as certified by a physician) not to exceed 3 months, and 
the particular month involved is one of the first 3 months 
throughout which such person is in such an institution or 
facility during a continuous period of institutionalization; and 
''(ii) such person needs to continue to maintain and provide 
for the expenses of the home or living arrangement to which he 
or she may return upon leaving the institution or facility. 
The benefit of any person under this title (including State 
supplementation if any) for each month to which this subparagraph 
applies shall be payable, without interruption of benefit payments 
and on the date the benefit involved is regularly due, at the rate 
that was applicable to such person in the month prior to the first 
month throughout which he or she is in the institution or facility. 

"(H) The Secretary shall establish procedures for the determina- Contracts, 
tions required by clauses (i) and (ii) of subparagraph (G), and may 
enter into agreements for making such determinations (or for 
providing information or assistance in connection with the making 
of such determinations) with appropriate State and local public and 
private agencies and organizations. Such procedures and agree- 
ments shall include the provision of appropriate assistance to 
individuals who, because of their physical or mental condition, are 
limited in their ability to furnish the information needed in connec- 
tion with the making of such determinations.". 

(b) Conforming Amendment.— Section 1902(1) of such Act is 42 use I396a. 
amended by striking "section 1611(e)(1)(E)" and inserting "subpara- 
graph (E) or (G) of section 1611(e)(1)". 

(c) Effective Date. — The amendments made by this section shall 42 USC 1382 
become effective July 1, 1988. 

SEC. 9116. RETENTION OF MEDICAID WHEN SSI BENEFITS ARE LOST 
UPON ENTITLEMENT TO EARLY WIDOW'S OR WIDOWER'S 
INSURANCE BENEFITS. 

(a) In General.— Section 1634 of the Social Security Act is 42 USC 1383c. 
amended by adding at the end the following new subsection: 
"(d) If any person — 

"(1) applies for and obtains benefits under subsection (e) or (f) 
of section 202 (or under any other subsection of section 202 if 
such person is also eligible for benefits under such subsection (e) 
or if)) as required by section 1611(e)(2), being then at least 60 
years of age but not entitled to hospital insurance benefits 
under part A of title XVIII, and 

"(2) is determined to be ineligible (by reason of the receipt of 
such benefits under section 202) for supplemental security 
income benefits under this title or for State supplementary 
payments of the type described in section 1616(a), 
such person shall nevertheless be deemed to be a recipient of 
supplemental security income benefits under this title for purposes 
of title XIX, so long as he or she (A) would be eligible for such 
supplemental security income benefits, or such State supplementary 
payments, in the absence of such benefits under section 202, and (B) 
is not entitled to hospital insurance benefits under part A of title 
XVIIL". 



101 STAT. 1330-306 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 1383c 
note. 



42 use 1383c 
note. 



42 use 1396s. 



42 use 1383c 
note. 



42 use 1383 
note. 

Grants. 



Grants. 



(b) Notice. — The Secretary of Health and Human Services, acting 
through the Social Security Administration, shall (within 3 months 
after the date of the enactment of this Act) issue a notice to all 
individuals who will have attained age 60 but not age 65 as of April 
1, 1988, and who received supplemental security income benefits 
under title XVI of the Social Security Act prior to attaining age 60 
but lost those benefits by reason of the receipt of widow's or 
widower's insurance benefits (or other benefits as described in sec- 
tion 1634(d)(1) of that Act as added by subsection (a) of this section) 
under title II of that Act. Each such notice shall set forth and 
explain the provisions of section 1634(d) of the Social Security Act 
(as so added), and shall inform the individual that he or she should 
contact the Secretary or the appropriate State agency concerning 
his or her possible eligibility for medical assistance benefits under 
such title XIX. 

(c) State Determinations. — Any determination required under 
section 1634(d) of the Social Security Act with respect to whether an 
individual would be eligible for benefits under title XVI of such Act 
(or State supplementary payments) in the absence of benefits under 
section 202 shall be made by the appropriate State agency. 

(d) Conforming Amendments.— Section 1922(a)(2) of the Social 
Security Act is amended — 

(1) by striking "1634 (b)" in subparagraph (B) and inserting 
"1634 (b) and (c)"; and 

(2) by adding at the end the following new subparagraph: 
"(C) Section 1634(d) of this Act (relating to individuals who lose 

eligibility for SSI benefits due to entitlement to early widow's or 
widower's insurance benefits under section 202 (e) or (f) of this 
Act).". 

(e) Effective Date. — The amendments made by subsection (a) 
shall apply with respect to any individual without regard to whether 
the determination of his or her ineligibility for supplemental secu- 
rity income benefits by reason of the receipt of benefits under 
section 202 of the Social Security Act (as described in section 
1634(d)(2) of such Act) occurred before, on, or after the date of the 
enactment of this Act; but no individual shall be eligible for assist- 
ance under title XIX of such Act by reason of such amendments for 
any period before July 1, 1988. 

SEC. 9117. DEMONSTRATION PROGRAM TO ASSIST HOMELESS INDIVID- 
UALS. 

(a) In General. — The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") is authorized to make 
grants to States for projects designed to demonstrate and test the 
feasibility of special procedures and services to ensure that homeless 
individuals are provided SSI and other benefits under the Social 
Security Act to which they are entitled and receive assistance in 
using such benefits to obtain permanent housing, food, and health 
care. Each project approved under this section shall meet such 
conditions and requirements, consistent with this section, as the 
Secretary shall prescribe. 

03) Scope of Projects.— Projects for which grants are made under 
this section shall include, more specifically, procedures and services 
to overcome barriers which prevent homeless individuals (particu- 



8t> Copy read "Social Security (as", 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-307 



larly the chronically mentally ill) from receiving and appropriately 
using benefits, including — 

(1) the creation of cooperative approaches between the Social 
Security Administration, State and local governments, shelters 
for the homeless, and other providers of services to the 
homeless; 

(2) the establishment, where appropriate, of multi-agency SSI 
Outreach Teams (as described in subsection (c)), to facilitate 
communication between the agencies and staff involved in 
taking and processing claims for SSI and other benefits by the 
homeless who use shelters; 

(3) special efforts to identify homeless individuals who are 
potentially eligible for SSI or other benefits under the Social 
Security Act; 

(4) the provision of special assistance to the homeless in 
applying for benefits, including assistance in obtaining and 
developing evidence of disability and supporting documentation 
for nondisability-related eligibility requirements; 

(5) the provision of special training and assistance to public 
and private agency staff, including shelter employees, on 
disability eligibility procedures and evidentiary requirements; 

(6) the provision of ongoing assistance to formerly homeless 
individuals to ensure their responding to information requests 
related to periodic redeterminations of eligibility for SSI and 
other benefits; 

(7) the provision of assistance in ensuring appropriate use of 
benefit funds for the purpose of enabling homeless individuals 
to obtain permanent housing, nutrition, and physical and 
mental health care, including the use, where appropriate, of the 
disabled individual's representative payee for case management 
services; and 

(8) such other procedures and services as the Secretary may 
approve. 

(c) SSI Outreach Team Projects.— (1) If a State applies for funds 
under this section for the purpose of establishing a multi-agency SSI 
Outreach Team, the membership and functions of such Team ^ ^ 
shall be as follows (except as provided in paragraph (2)): 

(A) The membership of the Team shall include a social serv- 
ices case worker (or case workers, if necessary); a consultative 
medical examiner who is qualified to provide consultative 
examinations for the Disability Determination Service of the 
State; a disability examiner, from the State Disability Deter- 
mination Service; and a claims representative from an office of 
the Social Security Administration. 

(B) The Team shall have designated members responsible 
for— 

(i) identification of homeless individuals who are poten- 
tially eligible for SSI or other benefits under the Social 
Security Act; 

(ii) ensuring that such individuals understand their rights 
under the programs; 

(iii) assisting such individuals in applying for benefits, 
including assistance in obtaining and developing evidence 



®' Copy read "team". 



101 STAT. 1330-308 PUBLIC LAW 100-203— DEC. 22, 1987 



and supporting documentation relating to disability- and 
nondisability-related eligibility requirements; 

(iv) arranging transportation and accompanying ap- 
plicants to necessary examinations, if needed; and 

(v) providing for the tracking and monitoring of all claims 
for benefits by individuals under the project. 

(2) If the Secretary determines that an application by a State for 
an SSI Outreach Team Project under this section which proposes a 
membership and functions for such Team different from those 
prescribed in paragraph (1) but which is expected to be as effective, 
the Secretary may waive the requirements of such paragraph. 

(d) Information and Reports; Evaluation.— (1) Each State 
having an approved SSI Outreach Team Project shall periodically 
submit to the Secretary such information (with respect to the 
project) as may be necessary to enable the Secretary to evaluate 
such project in particular and the demonstration program under 
this section in general. 

(2)(A) The Secretary shall from time to time (but not less often 
than annually) submit to the Congress a full and complete report on 
the program under this section, together with a detailed evaluation 
of such program and of the projects thereunder along with such 
recommendations as may be deemed appropriate. Such evaluation 
and such recommendations shall be designed to serve as a basis for 
determining whether (and to what extent) the activities and proce- 
dures included in the demonstration program under this section 
should be continued, expanded, or modified, or converted (with or 
without changes) into a regular feature of permanent law. 

(B) The criteria used by the Secretary in evaluating the program 
and the projects thereunder shall not be limited to those which 
would normally be used in evaluating programs and activities of the 
kind involved, but shall fully take into account the special cir- 
cumstances of the homeless and their need for personalized atten- 
tion and follow-through assistance, and shall emphasize the extent 
to which the procedures and assistance made available to applicants 
under such projects are recognizing those circumstances and meet- 
ing that need. 

(e) Authorization of Appropriations. — To carry out this section, 
there are authorized to be appropriated to the Secretary— 

(A) the sum of $1,250,000 for the fiscal year 1988; 

(B) the sum of $2,500,000 for the fiscal year 1989; and 

(C) such sums as may be necessary for each fiscal year 
thereafter. 

SEC. 9118. ASSISTANCE TO HOMELESS AFDC FAMILIES. 

Federal Register, The Secretary of Health and Human Services may not take any 
publication. action, prior to October 1, 1988, that would have the effect of 
implementing in whole or in part the proposed regulation published 
in the Federal Register on December 14, 1987, with respect to 
emergency assistance and the need for and amount of assistance 
under the program of aid to families with dependent children, or 
that would change current policy with respect to any of the matters 
addressed in such proposed regulation. 

SEC. 9119. INCREASE IN PERSONAL NEEDS ALLOWANCE FOR SSI RECIPI- 
ENTS. 



42 use 1382. 



(a) Increase in Standard.— Section 1611(e)(1)(B) of the Social 
Security Act is amended — 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-309 



(1) by striking "$300 per year" in clauses (i) and (ii)(I) and 
inserting "$360 per year"; and 

(2) by striking "$600 per year" in clause (iii) and inserting 
"$720 per year". 

(b) Mandatory Pass-Through of Increased Personal Needs 
Allowance. — Section 1618 of such Act is amended by adding at the 42 USC I382g. 
end the following new subsection: 

"(g) In order for any State which makes supplementary payments 
of the type described in section 1616(a) (including payments pursu- 
ant to an agreement entered into under section 212(a) of Public Law 
93-66) to recipients of benefits determined under section 
1611(e)(1)(B), on or after October 1, 1987, to be eligible for payments 
pursuant to title XIX with respect to any calendar quarter which 
begins — 

"(1) after October 1, 1987, or, if later 

"(2) after the calendar quarter in which it first makes such 
supplementary payments to recipients of benefits so deter- 
mined, 

such State must have in effect an agreement with the Secretary 
whereby the State will — 

"(3) continue to make such supplementary payments to recipi- 
ents of benefits so determined, and 

"(4) maintain such supplementary payments to recipients of 
benefits so determined at levels which assure (with respect to 
any particular month beginning with the month in which this 
subsection is first effective) that — 

"(A) the combined level of such supplementary payments 
and the amounts payable to or on behalf of such recipients 
under section 1611(e)(1)(B) for that particular month, 
is not less than — 

"(B) the combined level of such supplementary payments 
and the amounts payable to or on behalf of such recipients 
under section 1611(e)(1)(B) for October 1987 (or, if no such 
supplementary payments were made for that month, the 
combined level for the first subsequent month for which 
such payments were made), increased — 

"(i) in a case to which clause (i) of such section 
1611(e)(1)(B) applies or (with respect to the individual or 
spouse who is in the hospital, home, or facility in- 
volved) to which clause (ii) of such section applies, by 
$5, and 

"(ii) in a case to which clause (iii) of such section 
1611(e)(1)(B) applies, by $10.". 

(c) Effective Date.— The amendments made by subsections (a) 42 USC 1382 
and (b) shall become effective July 1, 1988. note. 

SEC. 9120. EXCLUSION OF DEATH BENEFITS TO THE EXTENT SPENT ON 
LAST ILLNESS AND BURIAL. 

(a) In General.— Subparagraphs (D) and (E) of section 1612(a)(2) of 
the Social Security Act are amended to read as follows: 42 USC 1382a. 

"(D) payments to the individual occasioned by the death 
of another person, to the extent that the total of such 
payments exceeds the amount expended by such individual 
for purposes of the deceased person's last illness and burial; 

"(E) support and alimony payments, and (subject to the 
provisions of subparagraph (D) excluding certain amounts 



101 STAT. 1330-310 PUBLIC LAW 100-203— DEC. 22, 1987 



expended for purposes of a last illness and burial) gifts (cash 

or otherwise) and inheritances; and". 
42 use 1382a (b) EFFECTIVE Date=— The amendments made by subsection (a) 
^ote. shall become effective April 1, 1988. 

42 use 602 note. SEC. 9121. DEMONSTRATION OF FAMILY INDEPENDENCE PROGRAM. 

(a) In General. — Upon application of the State of Washington 
and approval by the Secretary of Health and Human Services, the 
State of Washington (in this section referred to as the "State") may 
conduct a demonstration project in accordance with this section for 
the purpose of testing whether the operation of its Family Independ- 
ence Program enacted in May 1987 (in this section referred to as the 
"Program"), as an alternative to the AFDC program under title IV 
of the Social Security Act, would more effectively break the cycle of 
poverty and provide families with opportunities for economic 
independence and strengthened family functioning. 

(b) Nature of Project. — Under the demonstration project con- 
ducted under this section — 

(1) every individual eligible for aid under the State plan 
approved under section 402(a) of the Social Security Act shall be 
eligible to enroll in the Program, which shall operate simulta- 
neously with the AFDC program so long as there are individuals 
who qualify for the latter; 

(2) cash assistance shall be furnished in a timely manner to 
all eligible individuals under the Program (and the State may 
not make expenditures for services under the Program until it 
has paid all necessary C£ish assistance), with no family receiving 
less in cash benefits than it would have received under the 

, AFDC program; 

(3) individuals may be required to register, undergo assess- 
ment, and participate in work, education, or training under the 
Program, except that — 

(A) work or training may not be required in the case of — 

(i) a single parent of a child under six months of age, 
or more than one parent of such a child in a two-parent 
family, 

(ii) a single parent with a child of any age who has 
received assistance for less than six months, 

(iii) a single parent with a child under three years of 
age who has received assistance for less than three 
years, 

(iv) an individual under 16 years of age or over 64 
years of age, 

(v) an individual who is incapacitated, temporarily 
ill, or needed at home to care for an impaired person, or 

(vi) an individual who has not yet been individually 
notified in writing of such requirement or of the expira- 
tion of his or her exempt status under this subpara- 
graph; 

(B) participation in work or training shall in any case be 
voluntary during the first two years of the Program, and 
may thereafter be made mandatory only in counties where 

* more than 50 percent of the enrollees can be placed in 

employment within three months after they are job ready; 

(C) in no case shall the work and training aspect of the 
Program be mandated in any county where the unemploy- 
ment level is at least twice the State average; and 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-311 



(D) mandated work shall not include work in any position 
created by a reduction in the work force, a bona fide labor 
dispute, the decertification of a bargaining unit, or a new 
job classification which subverts the intention of the 
Program; 

(4) there shall be no change in existing State law which would 
eliminate guaranteed benefits or reduce the rights of applicants 
or enroUees; and 

(5) the Program shall include due process guarantees and 
procedures no less than those which are available to partici- 
pants in the AFDC program under Federal law and regulation 
and under State law. 

(c) Waivers. — The Secretary shall (with respect to the project 
under this section) waive compliance with any requirements con- 
tained in title IV of the Social Security Act which (if applied) would 
prevent the State from carrying out the project or effectively achiev- 
ing its purpose, or with the requirements of sections 1902(a)(1), 
1902(e)(1), and 1916 of that Act (but only to the extent necessary to 
enable the State to carry out the Program as enacted by the State 
in April 1987). 

(d) Funding.— 

(1) The Secretary, under section 403(b) or 1903(d) of the Social 
Security Act, shall reimburse the State for its expenditures 
under the Program — 

(A) at a rate equal to the Federal matching rate ap- 
plicable to the State under section 403(a)(1) (or 1118) of the 
Social Security Act, for cash assistance, medical assistance, 
and child care provided to enrollees; 

(B) at a rate equal to the applicable Federal matching 
rate under section 403(a)(3) of such Act, for administrative 
expenses; and 

(C) at the rate of 75 percent for an evaluation plan 
approved by the Secretary. 

(2) As a condition of approval of the project under this section, 
the State must provide assurances satisfactory to the Secretary 
that the total amount of Federal reimbursement over the period 
of the project will not exceed the anticipated Federal reimburse- 
ments (over that period) under the AFDC and Medicaid pro- 
grams; but this paragraph shall not prevent the State from 
claiming reimbursement for additional persons who would qual- 
ify for assistance under the AFDC program, for costs attrib- 
utable to increases in the State's payment standard, or for any 
other federally-matched benefits or services. 

(e) Evaluation.— The State must satisfy the Secretary that the 
Program will be evaluated using a reasonable methodology. 

(f) Duration of Project.— 

(1) The project under this section shall begin on the date on 
which the first individual is enrolled in the Program and (sub- 
ject to paragraph (2)) shall end five years after that date. 

(2) The project may be terminated at any time, on six months 
written notice, by the State or (upon a finding that the State has 
materially failed to comply with this section) by the Secretary. 



Copy read "program". 
Copy read "program". 



101 STAT. 1330-312 PUBLIC LAW 100-203— DEC. 22, 1987 



42 use 602 note. SEC. 9122. CHILD SUPPORT DEMONSTRATION PROGRAM IN NEW YORK 

STATE. 

(a) In General. — Upon application by the State of New York and 
approval by the Secretary of Health and Human Services (in this 
section referred to as the "Secretary"), the State of New York (in 
this section referred to as the "State") may conduct a demonstration 
program in accordance with this section for the purpose of testing a 
State program as an alternative to the program of Aid to Families 
with Dependent Children under title IV of the Social Security Act. 

(b) Nature of Program. — Under the demonstration program con- 
ducted under this section — 

(1) all custodial parents of dependent children who are eligible 
_ for supplements under the State plan approved under section 

402(a) of the Social Security Act (and such other types or classes 
of such parents as the State may specify) may elect to receive 
benefits under the State's Child Support Supplement Program 
in lieu of supplements under such plan; and 

(2) the Federal Government will pay to the State with respect 
to families receiving benefits under the State's Child Support 
Supplement Program the same amounts as would have been 
payable with respect to such families under sections 403 and 
1903 of the Social Security Act as if the families were receiving 
aid and medical assistance under the State plans in effect with 
respect to such sections. 

(c) Waivers. — The Secretary shall (with respect to the program 
under this section) waive compliance with any requirements con- 
tained in title IV of the Social Security Act which (if applied) would 
prevent the State from carrying out the program or effectively 
achieving its purpose. 

(d) Conditions of Approval. — As a condition of approval of the 
program under this section, the State shall — 

(1) provide assurances satisfactory to the Secretary that the 
State— 

(A) will continue to make assistance available to all 
eligible children in the State who are in need of financial 
support, and 

(B) will continue to operate an effective child support 
enforcement program; 

(2) agree — 

(A) to have the program evaluated, and 
Reports. (B) to report interim findings to the Secretary at such 

times as the Secretary shall provide; and 

(3) satisfy the Secretary that the program will be evaluated 
using a reasonable methodology that can determine whether 
changes in work behavior and changes in earnings are attrib- 
utable to participation in the program. 

(e) Application Process.— In order to participate in the program 
under this section, the State must submit an application under this 
section not later than two years after the date of enactment of this 
Act. The Secretary shall approve or disapprove the application of 
the State not later than 90 days after the date of its submission. If 
the application is disapproved, the Secretary shall provide to the 
State a statement of the reasons for such disapproval, of the changes 
needed to obtain approval, and of the date by which the State may 
resubmit the application. 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-313 



(f) Effective Date. — The program under this section shall com- 
mence not later than the first day of the third calendar quarter 
beginning on or after the date on which the application of the State 
is approved in accordance with subsection (e). 

(g) Duration of Program.— 

(1) Except as provided in paragraph (2), if the Secretary 
approves the application of the State, the demonstration pro- 
gram under this section shall be conducted for a period not to 
exceed five years. 

(2) (A) The Governor of the State may before the end of the 
period described in paragraph (1) terminate the demonstration 
program under this section if the Governor finds that the 
program is not successful in testing the State's Child Support 
Supplement Program as an alternative to the program under 
title IV of the Social Security Act. The Governor shall notify the 
Secretary of the decision to terminate the program not less than 
three months prior to the date of such termination. 

(B) The Secretary may terminate the program before the end 
of such period if the Secretary finds that the program is not in 
compliance with the terms of the application. The Secretary 
shall notify the Governor of the decision to terminate the 
program not less than three months prior to the date of such 
termination. 

SEC. 9123. TECHNICAL CORRECTION. 

The subsection of section 1631 of the Social Security Act which 
|,| was added as subsection (j) by section 11006 of the Anti-Drug Abuse 
ji; Act of 1986 is redesignated as subsection (m) and is moved to the end 42 USC 1383. 
I'l of such section 1631 so that it appears immediately after subsection 

(1) thereof (as added by section 9111(a) of this Act); and the heading 

of such subsection is amended to read as follows: 

"Pre-Release Procedures for Institutionalized Persons". 

PART 2-SOCIAL SERVICES, CHILD WELFARE SERVICES, 
AND OTHER PROVISIONS RELATING TO CHILDREN 

SEC. 9131. PERMANENT EXTENSION OF AUTHORITY FOR VOLUNTARY 
FOSTER CARE PLACEMENTS. 

(a) In General.— Section 102 of the Adoption Assistance and 

Child Welfare Act of 1980 is amended— 42 USC 672 note. 

(1) in subsection (a)(1) (in the matter preceding subparagraph 
(A)), by striking "and before October 1, 1987,"; 

(2) in subsection (c), by striking all that follows "Septem- 
ber 30, 1979" and inserting a period; and 

(3) in subsection (e), by striking "with respect to which the 
amendments made by this section are in effect". 

(b) Effective Date.— The amendments made by subsection (a) 42 use 672 note, 
shall become effective October 1, 1987. 

SEC. 9132. 2.YEAR EXTENSION OF FOSTER CARE CEILING AND OF 
AUTHORITY TO TRANSFER FOSTER CARE FUNDS TO CHILD 
WELFARE SERVICES. 

(a) In General.— Section 474 of the Social Security Act is 42 use 674. 
amended— 



101 STAT, 1330-314 PUBLIC LAW 100-203— DEC, 22, 1987 



(1) in paragraphs (1), (2)(A)(iii), (2)(B), (4XB), and (5)(A)(ii) of 
subsection (b), by striking "through 1987" and inserting 
"through 1989"; 

(2) in paragraph (5)(A) of subsection (b) (in the matter preced- 
ing clause (i)), by striking "October 1, 1987" and inserting 
"October 1, 1989"; and 

(3) in paragraphs (1) and (2) of subsection (c), by striking 
"through 1987" and inserting "through 1989". 

42 use 674 note. (b) EFFECTIVE Date. — The amendments made by subsection (a) 
shall become effective October 1, 1987. 

SEC. 9133. MOTHER/INFANT FOSTER CARE. 

42 use 675. (a) In General,— Section 475(4) of the Social Security Act is 

amended — 

(1) by inserting "(A)" after "(4)"; and 

(2) by adding at the end the following new subparagraph: 
"(B) In cases where — 

"(i) a child placed in a foster family home or child-care 
institution is the parent of a son or daughter who is in the 
same home or institution, and 

"(ii) payments described in subparagraph (A) are being 
made under this part with respect to such child, 
the foster care maintenance payments made with respect to 
such child as otherwise determined under subparagraph (A) 
shall also include such amounts as may be necessary to cover 
the cost of the items described in that subparagraph with 
respect to such son or daughter.", 
(b) Conforming Amendments Relating to Eligibiuty Under 
42 use 602. Other Programs.— (1) Section 402(a)(24) of such Act is amended by 
striking "if an individual is receiving benefits under title XVI, then, 
for the period for which such benefits are received," and inserting 
the following: "if an individual is receiving benefits under title XVI 
or his costs in a foster family home or child-care institution are 
covered by the foster care maintenance payments being made to his 
or her minor parent as provided in section 475(4)(B), then, for the 
period for which such benefits are received or such costs are so 
covered ". 

42 use 672. (2) Section 472(h) of such Act is amended by adding at the end the 

following new sentence: "For purposes of the preceding sentence, a 
child whose costs in a foster family home or child-care institution 
are covered by the foster care maintenance payments being made 
with respect to his or her minor parent, as provided in section 
475(4)(B), shall be considered a child with respect to whom foster 
care maintenance payments are made under this section.". 
42 use 673. (3)(A) Section 473(a)(2)(A) of such Act is amended— 

(i) by striking "or" at the end of clause (i); ^ 
^' (ii) by adding "or" at the end of clause (ii); and ! 

(iii) by adding after clause (ii) the following ney^ clause: J 
"(iii) is a child whose costs in a foster family hom4^.<^%iy~'^ 
care institution are covered by the foster care jjj^mtela^^^'.ij 
payments being made with respect to his or her miaor parent -as 
provided in section 475(4)(B),". ' < 

(B) Section 473(a)(2)(B)(iii) of such Act is amended by in^jertivtg "ot* 
(A)(iii)" after "(A)(ii)". J^,- 

(4) Section 473(b) of such Act is amended by adding at the end the 
following new sentence: "For purposes of the preceding sentence, a 
child whose costs in a foster family home or child-care institution 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-315 



are covered by the foster care maintenance payments being made 
with respect to his or her minor parent, as provided in section 
475(4)(B), shall be considered a child with respect to whom foster 
care maintenance payments are being made under section 472.". 

(c) Effective Date. — The amendments made by this section shall 42 USC 602 note, 
become effective April 1, 1988. 

SEC. 9134. INCREASED FUNDING FOR SOCIAL SERVICES BLOCK GRANTS. 

(a) Increase in Funding.— Section 2003(c) of the Social Security 

Act is amended— 42 USC 1397b. 

(A) by striking "and" at the end of paragraph (2); 

(B) in paragraph (3), by striking "year" the first place it 
appears and all that follows through the period and inserting 
"years 1984, 1985, 1986, and 1987, and for each succeeding fiscal 
year other than the fiscal year 1988; and"; and 

(C) by adding at the end the following new paragraph: 
"(4) $2,750,000,000 for the fiscal year 1988.". 

(b) Requirement That Additional Funds Supplement and Not 42 use I397b 
Supplant Funds Available From Other Sources.— The additional 
$50,000,000 made available to the States for the fiscal year 1988 
pursuant to the amendments made by subsection (a) shall — 

(A) be used only for the purpose of providing additional 
services under title XX of the Social Security Act; and 

(B) be expended only to supplement the level of any funds 
that would, in the absence of the additional funds appropriated 
pursuant to such amendments, be available from other sources 
(including any amounts available under title XX of the Social 
Security Act without regard to such amendments) for services 
in accordance with such title, and shall in no case supplant such 
funds from other sources or reduce the level thereof 

SEC. 9135. EXTENSION OF SOCIAL SERVICES BLOCK GRANT AND CHILD 
WELFARE SERVICES PROGRAMS TO AMERICAN SAMOA. 

(a) Social Services Block Grant Program.— (1) Section 
1101(a)(1) of the Social Security Act is amended by inserting "Amer- 42 USC 130L 
ican Samoa," after "Guam," in the last sentence. 

(2)(A) Section 2003(a) of such Act is amended by adding at the end 
the following new sentence: "The allotment for fiscal year 1989 and 
each succeeding fiscal year to American Samoa shall be an amount 
which bears the same ratio to the amount allotted to the Northern 
Mariana Islands for that fiscal year as the population of American 
Samoa bears to the population of the Northern Mariana Islands 
determined on the basis of the most recent data available at the 
time such allotment is determined.". 

(B) Section 20030b) of such Act is amended by inserting "American 
Samoa," after "the Virgin Islands," each place it appears. 

(b) Child Welfare Services Program.— (1) Section 1101(a)(1) of 
such Act is amended by adding at the end thereof the following new 
sentence: "Such term when used in part B of title IV also includes 
American Samoa.". 

(2) Section 421(b) of such Act is am.ended by striking "and Guam" 42 use 62L 
and inserting "Guam, and American Samoa". 

(c) Effective Date.— The amendments made by this section shall 42 use 621 note, 
apply with respect to fiscal years beginning on or after October 1, 

1988. 



101 STAT. 1330-316 PUBLIC LAW 100-203— DEC. 22, 1987 



Establishment. SEC. 9136. NATIONAL COMMISSION ON CHILDREN. 

Part A of title XI of the Social Security Act is amended by adding 
at the end the following new section: 

"national COMMISSION ON CHILDREN 

42 use 1320b-9. "Sec. 1139. (a)(1) There is hereby established a commission to be 
known as the National Commission on Children (in this section 
referred to as the 'Commission'). 

"(b)(1) The Commission shall consist of — 

"(A) 12 members to be appointed by the President, 
"(B) 12 members to be appointed by the Speaker of the House 
of Representatives, and 

"(C) 12 members to be appointed by the President pro tempore 
of the Senate. 

President of U.S. "(2) The President, the Speaker, and the President pro tempore 
shall each appoint as members of the Commission — 
"(A) 4 individuals who — 

"(i) are representatives of organizations providing serv- 
ices to children, 

"(ii) are involved in activities on behalf of children, or 
"(iii) have engaged in academic research with respect to 
the problems and needs of children, 
"(B) 4 individuals who are elected or appointed public officials 
(at the Federal, State, or local level) involved in issues and 
programs relating to children, and 

"(C) 4 individuals who are parents or representatives of par- 
ents or parents' organizations. 
"(3) The appointments made pursuant to subparagraphs (B) and 
(C) of paragraph (1) shall be made in consultation with the chairmen 
of committees of the House of Representatives and the Senate, 
respectively, having jurisdiction over relevant Federal programs. 
Reports. "(c)(1) It shall be the duty and function of the Commission to serve 

as a forum on behalf of the children of the Nation and to conduct 
the studies and issue the report required by subsection (d). 

"(2) The Commission (and any committees that it may form) shall 
conduct public hearings in different geographic areas of the country, 
both urban and rural, in order to receive the views of a broad 
spectrum of the public on the status of the Nation's children and on 
ways to safeguard and enhance the physical, mental, and emotional 
well-being of all of the children of the Nation, including those with 
physical or mental disabilities, and others whose circumstances 
deny them a full share of the opportunities that parents of the 
Nation may rightfully expect for their children. 

"(3) The Commission shall receive testimony from individuals, and 
from representatives of public and private organizations and institu- 
tions with an interest in the welfare of children, including edu- 
cators, health care professionals, religious leaders, providers of 
social services, representatives of organizations with children as 
members, elected and appointed public officials, and from parents 
and children speaking in their own behalf. 
Reports. "(d) The Commission shall submit to the President, and to the 

Committees on Finance and Labor and Human Resources of the 
Senate and the Committees on Ways and Means, Education and 
Labor, and Energy and Commerce of the House of Representatives, 
an interim report no later than September 30, 1988, and a final 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-317 



report no later than March 31, 1989, setting forth recommendations 
with respect to the following subjects: 

"(1) Questions relating to the health of children that the 
Commission shall address include — 

"(A) how to reduce infant mortality, 

"(B) how to reduce the number of low-birth-weight babies, 
"(C) how to reduce the number of children with chronic 
illnesses and disabilities, 

"(D) how to improve the nutrition of children, 
"(E) how to promote the physical fitness of children, 
"(F) how to ensure that pregnant women receive ade- 
quate prenatal care, 

"(G) how to ensure that all children have access to both 
preventive and acute care health services, and 

"(H) how to improve the quality and availability of health 
care for children. 
"(2) Questions relating to social and support services for 
children and their parents that the Commission shall address 
include — 

"(A) how to prevent and treat child neglect and abuse, 

"(B) how to provide help to parents who seek assistance 
in meeting the problems of their children, 

"(C) how to provide counseling services for children, 

"(D) how to strengthen the family unit, 

"(E) how children can be assured of adequate care while 
their parents are working or participating in education or 
training programs, 

"(F) how to improve foster care and adoption services, 

"(G) how to reduce drug and alcohol abuse by children 
and youths, and 

"(H) how to reduce the incidence of teenage pregnancy. 
"(3) Questions relating to education that the Commission 
shall address include — 

"(A) how to encourage academic excellence for all chil- 
dren at all levels of education, 

"(B) how to use preschool experiences to enhance edu- 
cational achievement, 

"(C) how to improve the qualifications of teachers, 

"(D) how schools can better prepare the Nation's youth to 
compete in the labor market, 

"(E) how parents and schools can work together to help 
children achieve success at each step of the academic 
ladder, 

"(F) how to encourage teenagers to complete high school 
and remain in school to fulfill their academic potential, 

"(G) how to address the problems of drug and alcohol 
abuse by young people, 

"(H) how schools might lend support to efforts aimed at 
reducing the incidence of teenage pregnancy, and 

"(I) how schools might better meet the special needs of 
children who have physical or mental handicaps. 
"(4) Questions relating to income security that the Commis- 
sion shall address include — 

"(A) how to reduce poverty among children, 

"(B) how to ensure that parents support their cnildren to 
the fullest extent possible through improved child support 



101 STAT. 1330-318 PUBLIC LAW 100-203— DEC. 22, 1987 



collection services, including services on behalf of children 
whose parents are unmarried, and 

"(C) how to ensure that cash assistance to needy children 
is adequate. 

"(5) Questions relating to tax policy that the Commission 
shall address include — 

"(A) how to assure the equitable tax treatment of families 
with children, 

"(B) the effect of existing tax provisions, including the 
dependent care tax credit, the earned income tax credit, 
and the targeted jobs tax credit, on children living in 
poverty, 

"(C) whether the dependent care tax credit should be 
refundable and the effect of such a policy, 
i "(D) whether the earned income tax credit should be 

adjusted for family size and the effect of such a policy, and 

"(E) whether there are other tax-related policies which 
would reduce poverty among children. 
"(6) In addition to addressing the questions specified in para- 
graphs (1) through (5), the Commission shall— 

"(A) seek to identify ways in which public and private 
organizations and institutions can work together at the 
community level to identify deficiencies in existing services 
for families and children and to develop recommendations 
to ensure that the needs of families and children are met, 
using all available resources, in a coordinated and com- 
prehensive manner, and 

"(B) assess the existing capacities of agencies to collect 
and analyze data on the status of children and on relevant 
programs, identify gaps in the data collection system, and 
recommend ways to improve the collection of data and the 
coordination among agencies in the collection and utiliza- 
tion of data. 

The reports required by this subsection shall be based upon the 
testimony received in the hearings conducted pursuant to subsection 
(c), and upon other data and findings developed by the Commission. 

"(e)(1)(A) Members of the Commission shall first be appointed not 
later than 60 days after the date of the enactment of this section, for 
terms ending on March 31, 1989. 

"(B) A vacancy in the Commission shall not affect its powers, but 
shall be filled in the same manner as the vacant position was first 
filled. 

"(2) The Commission shall elect one of its members to serve as 
Chairman of the Commission. The Chairman shall be a nonvoting 
member of the Commission. 

"(3) A majority of the members of the Commission shall constitute 
a quorum for the transaction of business. 

"(4)(A) The Commission shall meet at the call of the Chairman, or 
at the call of a majority of the members of the Commission. 

"(B) The Commission shall meet not less than 4 times during the 
period beginning with the date of the enactment of this section and 
ending with March 31, 1989. 

"(5) Decisions of the Commission shall be according to the vote of a 
simple majority of those present and voting at a properly called 
meeting. 

"(6) Members of the Commission shall serve without compensa- 
tion, but shall be reimbursed for travel, subsistence, and other 



PUBLIC LAW 100-203— DEC. 22, 1987 101 STAT. 1330-319 



necessary expenses incurred in the performance of their duties as 

members of the Commission. 

"(f)(1) The Commission shall appoint an Executive Director of the 

Commission who shall be compensated at a rate fixed by the 

Commission, but which shall not exceed the rate established for 
1 1 level V of the Executive Schedule under title 5, United States Code. 
' "(2) In addition to the Executive Director, the Commission may 

appoint and fix the compensation of such personnel as it deems 
I advisable, in accordance with the provisions of title 5, United States 
1 Code, governing appointments to the competitive service, and the 

I provisions of chapter 51 and subchapter III of chapter 53 of such 

II title, relating to classification and General Schedule pay rates. 

"(g) In carrying out its duties, the Commission, or any duly 
organized committee thereof, is authorized to hold such hearings, sit 

f and act at such times and places, and take such testimony, with 
respect to matters for which it has a responsibility under this 
section, as the Commission or committee may deem advisable. 

' "(h)(1) The Commission may secure directly from any department 
or agency of the United States such data and information as may be 

j necessary to carry out its responsibilities. 

I "(2) Upon request of the Commission, any such department or 

agency shall furnish any such data or information. 

"(i) The General Services Administration shall provide to the 

Commission, on a reimbursable basis, such administrative support 
I services as the Commission may request. 

, "(j) There are authorized to be appropriated such sums as may be 
I necessary to carry out this section.". 

! SEC. 9137, BOARDER BABIES DEMONSTRATION PROJECT. 

Section 426 of the Social Security Act is amended— 42 USC 626. 

(1) by redesignating subsection (b) as subsection (c); and 

(2) by inserting immediately after subsection (a) the following 
new subsection: 

if "(b)(1) There are authorized to be appropriated $4,000,000 for each 
of the fiscal years 1988, 1989, and 1990 for grants by the Secretary to 
public or private nonprofit entities submitting applications under 

, this subsection for the purpose of conducting demonstration projects 
under this subsection to develop alternative care arrangements for 
infants who do not have health conditions that require hospitaliza- 

^1 tion and who would otherwise remain in inappropriate hospital 

' settings. 

I "(2) The demonstration projects conducted under this section may 
\ include — 

t "(A) multidisciplinary projects designed to prevent the 

inappropriate hospitalization of infants and to allow infants 
described in paragraph (1) to remain with or return to a parent 
in a residential setting, where appropriate care for the infant 
and suitable treatment for the parent (including treatment for 

I; drug or alcohol addiction) may be assured, with the goal (where 
possible) of rehabilitating the parent and eliminating the need 
for such care for the infant; 

' "(B) multidisciplinary projects that assure appropriate, 

individualized care for such infants in a foster home or other 

I non-medical residential setting in cases where such infant does 

i not require hospitalization and would otherwise remain in 
inappropriate hospital settings, including projects to dem- 



101 STAT. 1330-320 PUBLIC LAW 100-203— DEC. 22, 1987 



onstrate methods to recruit, train, and retain foster care 
families; and 

"(C) such other projects as the Secretary determines will best 
serve the interests of such infants and will serve as models for 
projects that agencies or organizations in other communities 
may wish to develop. 
"(3) In the case of any project which includes the use of funds 
authorized under this subsection for the care of infants in foster 
homes or other non-medical residential settings away from their 
parents, there shall be developed for each such infant a case plan of 
the type described in section 475(1) (to the extent that such infant is 
not otherwise covered by such a plan), and each such project shall 
include a case review system of the type described in section 475(5) 
(covering each such infant who is not otherwise subject to such a 
system). 

"(4) In evaluating applications from entities proposing to conduct 
demonstration projects under this subsection, the Secretary shall 
give priority to those projects that serve areas most in need of 
alternative care arrangements for infants described in paragraph 
(1). 

"(5) No project may be funded unless the application therefor 
contains assurances that it will— 

"(A) provide for adequate evaluation; 
"(B) provide for coordination with local governments; 
"(C) provide for community education regarding the inappro- 
priate hospitalization of infants; 

"(D) use, to the extent practical, other available private, loc